Fitch maintained France’s sovereign rating at A+, but lowered its outlook to ” stable “ has “negative”. Behind the debt expected to be around 124% of GDP in 2028, the most concrete danger comes from the gradual refinancing of old loans at rates close to 5%.
In brief
- Fitch maintains France’s rating at A+, but lowers its outlook to “negative”.
- French public debt could reach 124% of GDP in 2028.
- Rising interest rates gradually make refinancing debt more expensive.
- The annual interest charge could increase from 79.2 to 91.2 billion euros between 2026 and 2027.
- Weak growth and political tensions make it difficult to reduce the public deficit.
Fitch prepares the ground for further downgrade
The decision of October 30 does not constitute an immediate drop in the French rating. However, it warns that Fitch could downgrade it if the government fails to stabilize the debt, sustainably reduce the deficit or restore investor confidence.
The agency cites weaker growth, high borrowing costs and a larger deficit than in its August review. She also underlines that political fragmentation and the social context complicate the adoption and then the application of a budgetary program over several years.
The main indicators show why the outlook has deteriorated:
- Public debt reached 3,595.5 billion euros at the end of June 2026;
- It then represented 119% of GDP, compared to 115.7% at the end of 2025;
- Fitch forecasts a ratio close to 124% in 2028;
- The public deficit is expected to reach 5.4% of GDP in 2026;
- The French ten-year rate recently exceeded 5.14%, a high since 2002;
- The annual interest charge would increase from 79.2 billion euros in 2026 to 91.2 billion in 2027.
The government presents a slightly less degraded trajectory. Its debt report foresees a ratio of 119.3% of GDP in 2026, then 121.7% in 2027, with a start of decline from 2029. This improvement, however, depends on the adoption and execution of the measures contained in the budgetary texts.
Fitch remains more cautious. The agency estimated that the debates preceding the 2027 presidential election have not strengthened the likelihood of lasting deficit reduction. It nevertheless maintains an A+ rating thanks to the size of the economy, the solidity of institutions, membership of the euro zone and the resilience of the banking sector.
Each refinancing transforms rates into sustainable expense
France is not refinancing its 3,595 billion euros of debt in one go. The average life of the government’s marketable debt is approximately eight years and five months. This high maturity temporarily protects the budget against immediate transmission of market rates.
But this protection erodes with each deadline. When an old bond issued at a very low rate matures, the government must borrow again to repay its capital. The new title is then placed under current conditions, which are much more expensive.
The weighted average rate of OATs issued in 2026 already reached 3.55% at the end of Septemberwhile the ten-year benchmark rate approached 5% on October 30. The budgetary effect therefore diffuses slowly, but persists throughout the duration of the new obligations.
The interest charge forecast for 2027 would increase by 12 billion euros in one year, an increase of more than 15%. At the scale of all public administrations, it would increase from 2.2% of GDP in 2025 to 3.7% in 2030.
This mechanism counts for more than a one-off crossing of 120% or 124% of GDP. Each euro spent on interest reduces the means available for education, health, defense or investment, unless we increase taxes or further widen the deficit.
Low growth makes the problem worse. French GDP fell by 0.1% in the third quarter according to on-chain data, after stagnation in the second and a decline in the first. An almost immobile economy mechanically increases the weight of debt in relation to GDP and limits tax revenue.
The budget must convince beyond its simple adoption
The government wants to bring back the public deficit at 5% of GDP in 2027compared to 5.4% expected in 2026. The project is based on a total effort of 54 billion euros and on growth estimated at 1% next year.
Its adoption remains uncertain due to lack of majority in the National Assembly. The Minister of the Economy, Roland Lescure, excludes neither article 49.3 nor, as a last resort, ordinances. Fitch believes that constitutional mechanisms will likely pass the text.
However, this adoption will not be enough to restore confidence. Investors will have to believe that the measures will survive social tensions, parliamentary compromises and the presidential election. A budget imposed but quickly called into question would not stabilize rates in the long term.
The negative outlook therefore acts as a countdown. Fitch plans to review the French rating no later than the end of February 2027. Until then, the market will judge less the promises displayed than the country’s ability to effectively reduce its deficit. The real risk is not a sudden debt crisis, but a slow and cumulative increase in interest which gradually deprives the French budget of any room for maneuver.
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