Standard & Poor’s (S&P) on Friday downgraded France’s sovereign credit rating from AA- to A+, citing expectations that public debt will rise faster than previously projected. The move, the third downgrade by a major rating agency in roughly a month, heightens pressure on Prime Minister Sébastien Lecornu’s budget plans and adds to uncertainty ahead of the 2027 presidential elections, according to the Financial Times.
S&P maintained a stable outlook, noting that France is likely to meet its 5.4 per cent budget deficit target for 2025. However, the agency warned that “in the absence of significant additional budget deficit-reducing measures, the budgetary consolidation over our forecast horizon will be slower than previously expected.” It projected government debt to reach 121 per cent of GDP by 2028, up from 112 per cent at the end of last year, signaling rising borrowing costs for Paris amid widening spreads with German bonds.
The downgrade comes just days after Lecornu secured a fragile parliamentary majority following snap elections in June 2024, which left President Emmanuel Macron without a clear mandate. Lecornu, Macron’s fourth prime minister since the election, survived a confidence vote on Thursday thanks to abstentions from the centre-left Socialist party. However, the victory came at a cost: Macron’s proposed structural reforms to pensions have been suspended, at an estimated fiscal impact of €400 million in 2026 and €1.8 billion in 2027.
Facing the challenge of controlling a ballooning deficit, Lecornu has pressed lawmakers to negotiate his proposed €30 billion package of tax rises and spending cuts rather than pursuing challenges to his premiership. S&P warned that the 2027 election “casts doubt” on France’s ability to implement medium-term fiscal consolidation measures or achieve the EU-mandated 3 per cent of GDP deficit target by 2029.
Finance Minister Roland Lescure responded to the downgrade by emphasizing that it is “now the collective responsibility of the government and parliament to adopt a budget that meets this [5.4 per cent] target before the end of 2025.” Analysts cited by the Financial Times suggest that the downgrade may further complicate France’s efforts to balance fiscal prudence with political stability, particularly as the electorate approaches a high-stakes presidential contest.
