S&P Global has downgraded France’s long-term credit rating from AA- to A+, citing concerns over the country’s rising debt and political tensions. The agency has flagged governance challenges and ballooning liabilities in its latest sovereign review, warning that these factors threaten the government’s ability to reduce its budget deficit.

France’s government debt is expected to reach 121% of GDP in 2028, compared to 112% at the end of last year. The country has struggled to rein in spending while dealing with political turbulence, including Prime Minister Sebastien Lecornu recently surviving two no-confidence votes in parliament after suspending a contested pension reform package.

S&P has revised France’s outlook to ‘stable’, but warned that uncertainty surrounding the country’s public finances remains high, particularly ahead of the 2027 presidential election. The agency cited the government’s decision to suspend the 2023 pension reform law as a sign of political fragility. Economic growth is projected to be 0.7% in 2025, with only a muted recovery expected in 2026.

In reaction to the downgrade, Finance Minister Roland Lescure emphasized the need for the government and parliament to pass a budget by the end of the year, ensuring that the deficit is on a path to the EU ceiling of 3% of GDP. S&P noted that France will likely meet its 2025 deficit target of 5.4% of GDP, but warned that significant additional budget deficit-reducing measures are needed to achieve a faster pace of consolidation.

The downgrade is not the first sign of trouble for France’s creditworthiness, as S&P lowered the country’s outlook from ‘stable’ to ‘negative’ earlier this year due to weak public finances. Last month, Fitch also cut France’s rating from AA- to A+, citing similar concerns about debt and the lack of a credible fiscal roadmap. The downgrade could increase France’s borrowing costs and trigger forced bond sales by institutional investors limited to holding high-grade sovereign debt.

The decision by S&P Global highlights the need for France to address its fiscal challenges and implement significant reforms to restore its creditworthiness. With the 2027 presidential election approaching, the country’s ability to manage its debt and implement effective economic policies will be closely watched by investors and rating agencies.