Rating agency S&P upheld France’s “AA-/A-1+” credit rating on Friday, maintaining a stable outlook despite political uncertainty and a growing national debt. The decision reflects confidence in France’s capacity to stabilize public finances in the medium term, even as delays in fiscal reforms persist.
S&P acknowledged challenges in fiscal governance, driven by rising political fragmentation, which has complicated the approval of a credible 2025 budget. However, the agency expressed optimism that France would eventually align with EU fiscal requirements and pursue budgetary consolidation.
Prime Minister Michel Barnier leads a minority government grappling with opposition pressure over budgetary decisions. In a bid to ease tensions and calm market concerns, Barnier announced the removal of a controversial electricity tax hike from the proposed budget—a significant concession aimed at securing support.
Despite this move, Barnier faces resistance from the far-right National Rally and a left-wing alliance, both of which are leveraging the budget impasse to challenge his administration.
S&P’s stable outlook balances risks associated with political instability and mounting public debt against the strengths of France’s economy and its potential to implement gradual fiscal reforms. This decision provides some reassurance to financial markets, highlighting the resilience of France’s fiscal framework amid turbulent domestic politics.
