S&P Global Ratings Lowers France's Credit Rating to 'A+' Amid Budgetary Concerns

S&P Global Ratings Downgrades France's Sovereign Credit

S&P Global Ratings announced on October 17, 2025, that it has lowered France's long-term sovereign credit rating to 'A+' from 'AA-'. The short-term sovereign credit rating was affirmed at 'A-1'. This move by the international credit rating agency stems from heightened risks to budgetary consolidation and concerns regarding the French government's capacity to significantly reduce its deficit and debt. The outlook on the long-term ratings remains stable.

Rationale Behind the Downgrade

S&P cited 'elevated' uncertainty surrounding France's public finances as a primary driver for the downgrade, despite the recent submission of the 2026 draft budget to parliament. The agency expressed doubts about the government's ability to meet its deficit reduction targets. Political instability also played a role in the assessment, with S&P noting that policy uncertainty is expected to affect the French economy by impacting investment activity and private consumption, thereby hindering economic growth. This includes references to Prime Minister Sebastien Lecornu's pledge to suspend a 2023 pension reform and the recent votes of no-confidence faced by the government.

S&P's projections indicate that France's budget shortfall is expected to decline only gradually, from an estimated 5.4% of GDP in 2024 to 4.7% in 2025, according to the government's draft plan. Furthermore, the agency forecasts that gross public debt will reach 121% of GDP by 2028, an increase from 112% at the end of 2024.

Government Response and Broader Context

In response to the downgrade, French Finance Minister Roland Lescure acknowledged the decision. He emphasized that it is now 'the collective responsibility of the government and parliament' to pass a budget by year-end, aiming to ensure the fiscal deficit is on a trajectory to meet the European Union's ceiling of 3% of GDP by 2029. The Ministry of Economy had presented a budget plan for 2026 earlier in the week, which aims to accelerate the reduction of the public deficit to 4.7% of GDP while preserving growth.

This marks the third consecutive downgrade for France by international credit rating agencies within a month, following similar actions by Fitch Ratings on September 12 and DBRS Morningstar on September 19. The latest downgrade places France's sovereign credit rating on par with that of countries such as Portugal, Spain, China, and Japan.

Economic Implications and Outlook

The stable outlook assigned by S&P balances the rising government debt and the weak political consensus on the pace of budgetary consolidation against France's inherent credit strengths. These strengths include a sound economy, a large domestic savings base, and a strong labor market. However, S&P warned that any failure to effectively address the persistent deficits could lead to renewed pressure on the rating. The downgrade could also potentially lead to higher borrowing costs for the French government in financial markets.