Rebelote a week later. The Fitch rating agency maintained France’s rating this Friday, October 27, six months after having downgraded it. A decision similar to that of Moody’s, another agency, at the end of last week. If the country can boast of having “a large, rich and diversified economy, strong and efficient institutions and macro-financial stability […] its public finances, and in particular its high level of debt, constitute a weak point in its rating,” noted Fitch in a press release.
The Minister of the Economy Bruno Le Maire took “note of the decision”, he indicated in a statement to AFP, saying he was “totally determined to restore France’s public finances”.
Fitch, which currently gives France a rating of “AA-“, one of the best possible – a sign that the country remains very credible in the eyes of the markets – however judged that the debt reduction trajectory was “limited”. “The draft budget for 2024 and the multiannual program envisage only a limited reduction in the budget deficit, from 4.9% in 2023 to 4.4% in 2024,” notes the rating agency.
“Stable” outlook
Fitch adds that it expects a public deficit of 4.6% in 2024, due to a “lower estimate (than that of the government, editor’s note) of growth” and the “risk that economies […] are not achieved”. To straighten out the public accounts from 2024, the government has ruled out tax increases and is instead banking on growth, with a forecast of 1.4% deemed “high” by the High Council of Public Finances. It is also counting on the end of exceptional support measures for households and businesses.
Debt exceeded 3,000 billion euros in the first quarter of 2023 and France plans to borrow a record amount of 285 billion euros on the markets in 2024. Fitch’s rating comes with a “stable” outlook , which means that the agency does not plan to modify it in the short term. But a “significant” deterioration in growth prospects, a drop in competitiveness or an increase in the deficit could have a negative impact on France’s rating, she warns.
After Moody’s and Fitch, it will be Standard & Poor’s (S&P) to look at France on December 1st.