France’s 10-year borrowing rate has moved above the US Treasury 10-year yield for the first time since 2013, and French borrowing costs now exceed those of Italy. Yet Fitch kept the country’s long-term credit rating at A+ on 30 October, while cutting its outlook from stable to negative.
The ratings agency pointed to weaker growth, a widening deficit and a deeply fragmented political landscape that it said was making agreement on a credible fiscal strategy difficult.
Fitch expects government debt to rise from 115.7% of gross domestic product in 2025 to approximately 124% by 2028, above its August forecast of 122.7%.
France’s deficit is estimated at near 5.4% of GDP, higher than in any other EU country and well above the bloc’s 3% limit. The country has been unable to balance its budget since 1974.
The fiscal adjustment needed to stabilise debt has increased from 3.0% of GDP to approximately 3.5%, Fitch estimated.
Bond investors have already put a price on the strain. France’s 10-year government bond yield reached 5.14%, its first time at that level since July 2002. The yield rose from 4.1% at Fitch’s August review to 4.9% by the end of October.
The gap between French and German 10-year yields reached its widest point in close to 15 years, touching 174 basis points at one stage.
Jim Reid and Henry Allen of Deutsche Bank found that France’s 10-year bond had recorded its worst year for returns in 223 years.
Interest costs are projected to increase from 2.5% of GDP in 2025 to 3.3% in 2028.
Economic growth has offered little relief. France’s GDP fell 0.1% in the third quarter, driven by a 0.6% fall in business investment in equipment, and the economy has yet to record positive growth this year.
Political stalemate has persisted since the 2024 snap election. France is due to elect a successor to President Emmanuel Macron in April or May 2027.
The country has yet to pass its 2027 budget, and National Assembly lawmakers have removed several proposed savings measures from the spending plan.
Andrzej Szczepaniak of Nomura said France’s meaningful primary deficit created stark concerns about debt sustainability. He said the country appeared to lack the political ability or will to make significant deficit cuts or introduce structural reforms.
Moody’s has held France at Aa3 since December 2024 and has kept it under a negative outlook since October 2025.
In October, Moody’s changed France’s outlook from stable to negative, citing the risk that political fragmentation would weaken the functioning of the country’s legislative institutions.
Szczepaniak expects Moody’s to cut France’s rating to A1 with a stable outcome.
S&P Global Ratings and Fitch have already downgraded France. Demonstrations over living costs and school funding have escalated into disorder and looting, and further protests are planned.
Fitch will reassess France’s rating by the end of February 2027 at the latest.
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