After the rating agencies Fitch and Moody’s which, a month ago, had not revised the French rating downwards, it was the turn of Standard & Poor’s to deliver its verdict this Friday, May 31. The American rating agency, for its part, decided to lower France’s sovereign rating from “AA” to “AA-“, sanctioning the country’s “deterioration of the budgetary position”.
“The deterioration reflects our projection that, contrary to our previous expectations, French public debt as a proportion of GDP will increase due to larger than expected deficits in 2023-2027,” justified the American company in an analysis accompanying the note, recalling that the French public deficit had been in 2023 “significantly higher than what we had planned”.
S&P does not believe that the deficit will be reduced to 3% of GDP in 2027, as the government plans, and even expects 3.5% by that date. “Without additional measures to reduce the budget deficit, we believe that the reforms will not be sufficient to enable the country to achieve its budgetary objectives,” adds the agency. S&P had only revised its assessment downward for France twice, in January 2012 and in November 2013.
France therefore falls out of the group made up in particular of Belgium and the United Kingdom, but remains better rated than Spain or Italy.
The risk inherent in a downgrade is a movement of investor distrust and an increase in the debt burden. With a double A even followed by a minus sign, France’s capacity to honor its debt maturities remains “very strong” according to the rating agency’s criteria.
Paris reiterates the objective of a deficit below 3% in 2027
The Minister of the Economy Bruno Le Maire reiterated on Friday his desire to bring France’s public deficit below 3% in 2027.
“Our strategy remains the same: reindustrialize, achieve full employment and maintain our trajectory to return below the 3% deficit in 2027,” Bruno Le Maire declared to Le Parisien. “The main reason for this deterioration is that we saved the French economy,” he said. “There will be no impact on the daily lives of the French. Let’s take the proper measure of this decision. We remain at a very good rating level. It’s as if we had gone from 18 to 17 out of 20! Our debt easily finds buyers on the markets,” he added.
Nine days before the European elections, the oppositions began to attack the government on Friday evening. “This is where the pitiful management of public finances of the Macron/Le Maire duo is leading us!” wrote on X Eric Ciotti, president of the Republicans (right).