A S&P Global Ratings stated that the uncertainty over France’s public finances remains high, even after the presentation of the 2026 budget project to Parliament.
In a statement that accompanied the downgrade of the country’s sovereign rating, the agency warned that fiscal consolidation should be slower than expected and that the government’s gross debt could reach 121% of GDP in 2028, compared to 112% at the end of 2024.
S&P projects that the budget deficit target of 5.4% of GDP in 2025 should be met, supported by spending discipline and more robust revenue this year. However, without new significant adjustment measures, the agency estimates that deficits will remain high over the next three years, due to the still high level of the primary deficit.
The institution points out that political instability, considered the most intense since the founding of the Fifth Republic, has prevented progress in fiscal consolidation.
Since 2022, the country has faced two fragmented parliaments and the exchange of six, which, according to S&P, makes it difficult to formulate a credible medium-term fiscal plan. The suspension of the Social Security reform, approved in 2023, was cited as an example of the setback in spending containment policies.
For the agency, the lack of clarity regarding the adjustment of public accounts tends to weigh on private investment and consumption, limiting economic growth.
GDP is projected to rise by 0.7% in 2025, followed by a modest recovery of 1% in 2026, with families and businesses saving more amid the prospect of rising taxes and financing costs.
Even so, S&P highlighted that the fundamentals of the French economy remain solid, supported by a diversified productive base, high private savings and a liquid financial sector, in addition to institutional support derived from participation in the euro zone.
