(Reuters) -S&P Global Ratings on Friday lowered France’s sovereign rating to ‘A+/A-1’ from ‘AA-/A-1+’, saying fiscal consolidation will be slower than expected in the absence of significant additional measures to reduce the deficit.

“We believe that political uncertainty will weigh on the French economy by slowing investment and private consumption, and therefore growth,” the rating agency said in a press release.

The move comes as new Prime Minister Sébastien Lecornu survived two no-confidence motions in Parliament on Thursday, offering his government a temporary reprieve and the opportunity to present the 2026 budget.

According to S&P, the adoption of a budget by the end of the year would help clarify France’s strategy for managing a rising public debt, expected at 121.00% of GDP in 2028 compared to 112.00% at the end of 2024.

“Nevertheless, in our opinion, uncertainty over public finances remains high in the run-up to the 2027 presidential election,” the agency added.

S&P revised the country’s outlook to stable from negative previously. This assessment reflects a balance between the increase in public debt and the weak political consensus on the pace of budgetary consolidation, in the face of France’s structural assets.

The agency emphasizes that France benefits from a diversified economy and strong access to financial markets, but that these strengths are offset by high public spending and structurally large debt.

S&P warns that further downgrades could occur if fiscal dynamics deteriorate or if growth slows more sharply than expected. Conversely, a lasting improvement in public accounts could support an upward revision.

(Written by Nicolas Delame)

Copyright © 2025 Thomson Reuters