Fitch moved France's outlook to "negative" from "stable", citing worsening fiscal conditions and political fragmentation. The agency sees the debt-to-GDP ratio climbing to around 124% by 2028. The move follows Moody's decision to keep its rating unchanged.
Credit ratings agency Fitch on Friday revised France's outlook to "negative" from "stable", warning that deteriorating fiscal conditions and political fragmentation are undermining debt stabilization prospects. The agency's credit rating view now points to a higher risk of a future downgrade.
Weaker growth and a wider deficit
Fitch pointed to weaker growth, higher borrowing costs and a wider deficit since its August review. A fractured political landscape also makes sustained fiscal consolidation harder to deliver, the agency said.
The French economy unexpectedly shrank in the third quarter. October inflation, meanwhile, accelerated to the highest level since late 2023. Economy Minister Roland Lescure described the inflation as due to an unprecedented mix of external and internal shocks.
Yields at their highest since 2002
French 10-year yields hit their highest since 2002 last week at more than 5.14%, rising more sharply than those of most peers. The outlook revision adds to pressure on the government ahead of more planned protests this weekend, and it heightens the risk of a future downgrade.
Fitch now sees France's debt-to-GDP ratio climbing to around 124% by 2028 from 115.7% in 2025. However, the agency flagged that the country's large, diversified economy, strong institutions and euro area membership continue to anchor the rating.
The action comes just days after Moody's kept France's rating at "Aa3" with a "negative" outlook, citing expectations that a deficit-reduction budget for 2027 will be adopted.
Source: Reuters via Investing.com
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