Standard and Poor’s maintains France’s AA rating with a negative outlook

a The Efe agency quoted the decision to maintain the rating, which changed last December from stable to negative, “mainly due to a review of the government’s fiscal consolidation strategy.”

“These forecasts are subject to risks related to growth and the implementation of the government’s economic and budgetary policy,” the financial rating agency said in a statement.

The rating agency expects France’s budget deficit to fall to 3.8% in 2026, compared to about 5% in 2023, and for debt to remain above 110% of GDP.

However, “more restrictive financial conditions and still high core inflation will reduce economic activity in France in 2023 and 2024,” according to the S&P analysis.

Maintaining the rating is good news in Paris, as there were fears that S&P might go Fitch’s way.

At the end of April, this agency downgraded France from AA to AA- with a stable outlook, indicating weaknesses in the country’s key financial parameters and growth outlook.

Earlier, the third major agency, Moody’s, chose not to change its note on France.

The French government reacted immediately to the S&P assessment, with Economy Minister Bruno Le Maire highlighting the “positive sign” of the Journal du Dimanche.

The official stressed, “Our strategy with regard to public finances is clear, ambitious and credible. Our ambition, set by the President of the Republic, is to accelerate, more than ever before, the reduction of France’s debt.”

Specifically, the government’s plans are to reduce the debt to 108% of GDP by 2027 and reduce the public deficit to less than 3% in the same year.

The pillars of this goal will be reforms to achieve full employment, reduce public spending, and abandon, in Le Maire’s words, the “whatever the cost” strategy that has been applied in recent years due to exceptional cases, such as: it checks the rise in prices in the energy sector.

Also read: Standard & Poor’s raises the outlook for the UK and maintains the “rating” at “AAA / A-1”