A class council would say that France must do better, but without going as far as warning. The influential rating agency S&P Global Ratings "has decided to maintain" the debt rating of France, rejoiced Friday evening the Minister of Economy Bruno Le Maire, but this rating remains under negative outlook running the risk of a further downgrade.

S&P closes the autumn reviews of the major rating agencies for France. The company's current AA rating is equivalent to Moody's Aa2. Fitch is a notch below with AA-, after downgrading the rating in April. But where Moody's assigns a "stable" outlook to its rating, S&P has a negative outlook that looks like a sword of Damocles. On Friday, this sword did not fall on French public finances, despite a context of high interest rates.

"Positive signal", according to Jean-René Cazeneuve

S&P said on Friday it expects "a decline in public debt as a percentage of GDP from 2025, albeit very gradually," and believes that "the pass-through of higher borrowing costs due to high interest rates will be gradual."

However, the agency's experts believe that there are still "significant risks that could, if realized, further reduce France's fiscal flexibility," citing for example "stricter financing conditions" or "increased political fragmentation" that would complicate policy implementation.

"More than ever, we remain determined to reduce public spending and accelerate the reduction of France's debt," Bruno Le Maire reacted on X (ex Twitter), judging that it was at stake "our independence and the respect of our national and European commitments".

In his view, the maintenance of France's rating is a decision "consistent with the government's choices in terms of public finances".

"I take the maintenance of France's rating as a positive signal, which encourages us to stay the course on our public finance trajectory," reacted in a statement the deputy (Renaissance) Jean-René Cazeneuve, general rapporteur of the budget.

Despite a 0.1% contraction in France's economic activity in the third quarter, Le Maire continues to expect growth of 1% this year and 1.4% in 2024.

'Credible word'

Against the backdrop of a slowing European economy, economists' consensus for France's growth is only 0.8% for 2024, and was joined on Wednesday by the OECD, which still forecast 1.2% in September.

In June, S&P warned of "risks" to the execution of budgetary targets, and therefore to the ability to reduce a debt of more than 3,000 billion euros, the annual repayment of which will become the largest item of state expenditure in 2027, ahead of education.

In a note released earlier on Friday, Italy's UniCredit said S&P could leave its assessment unchanged for the time being "to assess the outcome of the government's recently launched public spending reviews with the aim of cutting public spending for good."

"The pension and labour reforms have pleased the rating agency," said Eric Dor, director of economic studies at the IESEG School of Management. However, "even if France maintained an AA rating this time, the risk would remain of a further downgrade," he observed, for example if debt is not reduced quickly enough.

The European Commission warned in November that France may not be on track in 2024, and an inglorious excessive deficit procedure could target the country next June.

The Mayor is currently putting forward proposals to ensure full employment and reduce public spending, such as reducing the duration of benefits for unemployed people over 55 years of age. According to a government adviser, a downgrade would be tantamount to "a questioning of the balance sheet on the economic policy of France".

  • Economy
  • Moody's
  • Fitch
  • Debt
  • Debt crisis
  • Bruno Le Maire