French Prime Minister Michel Barnier received another warning on Friday, October 11, from American credit rating company Fitch. Although Fitch decided not to downgrade the rating of French debt, keeping it at AA-, they added a “negative outlook” due to concerns about the government’s failure to fulfill promises to restore public finances.
Finance Minister Antoine Armand reiterated the government’s commitment to improving public finances after Fitch’s decision. However, France’s public deficit is expected to worsen, with the deficit projected to reach 6.1% of GDP by the end of the year.
Persistent political uncertainty
Experts doubt if the 2025 budget’s austerity measures can reduce the deficit to 5% of GDP as targeted. Fitch predicts a deficit of 5.4% of GDP in 2025 and 2026, citing political uncertainty and implementation risks.
The government plans to negotiate with Brussels to delay the deadline for reducing the deficit to below 3% of GDP, currently set for 2027. However, Fitch is skeptical about achieving this goal by 2029.
The warning from Fitch underlines the French government’s diminishing credibility in financial markets, with doubts arising about the Finance Ministry’s reliability.