Fitch maintains France's rating at A+, but warns about debt, the deficit, and political instability

Fitch Ratings maintained France’s sovereign rating at A+ on Friday, but changed the outlook from stable to negative, warning that slowing economic growth, deteriorating budgetary conditions, and rising bond yields are complicating efforts to reduce public debt.

Fitch notes that France’s debt dynamics have deteriorated since the last assessment, conducted at the end of August. The yield on French ten-year bonds rose to 4.97% on Friday, from 4.91% on Thursday, after exceeding the 5% threshold last week. The development indicates that markets are more sensitive to the country’s political and fiscal risks.

The agency considers that persistent political fragmentation and social tensions are making it difficult to adopt sustained fiscal consolidation. France’s economy stagnated in the second quarter and contracted by 0.1% in the third quarter.

Economy Minister Roland Lescure said that the Government must adopt a responsible budget by the end of the year, with the goal of reducing the deficit to 5%. The rating continues to be supported by the size and diversification of the economy, strong institutions, membership in the euro area, and the resilience of the banking system.