PARIS / LONDON (IT BOLTWISE) – Rating agency S&P has again downgraded France’s credit rating due to ongoing political uncertainties. The rating was cut from AA-/A-1+ to A+/A-1, putting France’s government bonds on par with Spain, Japan and China. This decision reflects the worst political instability since the founding of the Fifth Republic.
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The recent downgrade of France’s credit rating by the rating agency S&P has caused a stir in the financial world. The decision to lower France’s rating from AA-/A-1+ to A+/A-1 is a clear signal of the ongoing political instability in the country. This downgrade is the second in a year and a half and shows how uncertainties in French politics are affecting the confidence of international financial markets.
A key reason for the downgrade is the political fragmentation facing President Emmanuel Macron. Without a clear majority in parliament and in view of increasing political tensions, the government faces significant challenges. This instability is described as the worst since the founding of the Fifth Republic in 1958. Uncertainty about France’s future financial policy remains high despite the presentation of a draft budget for 2026.
Finance Minister Roland Lescure noted the downgrade and reiterated that the government still plans to gradually reduce new debt to below three percent of GDP by 2029. However, the question remains as to whether France will be able to take the necessary measures to balance the national budget. The forecasts suggest that the debt ratio could rise to 121 percent of GDP by the end of 2028, further straining the country’s financial situation.
The downgrade also has an impact on the cost of French government bonds, as investors could now demand higher interest rates. This could further increase the financial burden on France and exacerbate economic challenges. Political uncertainty and the upcoming presidential election in 2027 add to the uncertainty about whether the government can meet its financial targets.
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