France’s Credit Rating: Why S&P Kept France at A+ Despite Budget Turmoil

S&P keeps France at A+: what happened?

S&P Global Ratings confirmed that France’s long‑term sovereign rating remains at A+ with a stable outlook, following a scheduled review at the end of November. The agency had the option to upgrade, downgrade or reaffirm the rating, but instead chose not to take a new “rating action”, effectively leaving France at the same level as after October’s downgrade.

France’s rating had been cut from AA‑ to A+ by S&P on 17 October, earlier than expected in its calendar, as a warning about the risks surrounding budget consolidation and political uncertainty. By confirming the A+ level and stable outlook, S&P signals that it still sees France as a reliable borrower, but with clearly elevated fiscal and political risks compared with stronger eurozone peers such as Germany or the Netherlands.

A series of downgrades since September

The latest S&P decision comes after a difficult autumn for France on the bond markets, marked by several rating actions from the big agencies.

Fitch downgrade (September): In mid‑September 2025, Fitch Ratings lowered France’s long‑term rating from AA‑ to A+, citing structurally high deficits, rising debt and a weaker political capacity to deliver fiscal consolidation. This pushed France out of the “AA” club at a second major agency and underlined growing market concerns about its public finances.
S&P downgrade (October): On 17 October, S&P followed suit and cut France from AA‑ to A+, pointing to “elevated” risks to the country’s adjustment path and continued political instability after years of social tensions, protests and fragmented parliaments.
Moody’s more cautious stance: Moody’s has so far maintained France at Aa3, equivalent to AA‑, but shifted the outlook to “negative”, signalling that a downgrade is possible if Paris fails to deliver credible deficit reduction. This leaves Moody’s as the only one of the three big agencies still rating France one notch above A+.

Together, these decisions mean France now sits at A+ at both S&P and Fitch, aligning it with countries like Spain and Portugal in terms of perceived credit risk, even though those economies currently borrow slightly more cheaply on 10‑year markets thanks to stronger debt dynamics.

Why the rating matters for France

A sovereign rating is a key signal to investors about the probability that a country will repay its debt in full and on time. While A+ is still firmly in investment‑grade territory, it is a notch below the ratings enjoyed by the eurozone’s safest issuers, which can affect borrowing costs at the margin.

For France, this matters because:

High debt level: Public debt stands well above the 100% of GDP mark, making the State heavily dependent on bond markets to roll over existing obligations and finance new deficits. A lower rating can gradually translate into higher interest rates, which in turn increase the cost of servicing the debt and squeeze the room for other public spending.
Competition inside the eurozone: Within the euro area, investors can easily switch between sovereign bonds, which makes relative ratings and perceived fiscal discipline crucial. Being rated at the same level as Spain and Portugal, while Germany and the Netherlands remain higher, can influence how portfolios are allocated and how much extra yield France must offer.
Signal to Brussels and markets: A downgrade, or the threat of one, sends a strong message to the European Commission, the French government and traders that the current trajectory is not considered sustainable without corrective measures. Maintaining A+ with a stable outlook buys time, but not a blank cheque.

An uncertain budget and political backdrop

S&P’s decision arrives in the middle of one of the most complex budget seasons France has faced in years, with a hung parliament, repeated use of constitutional tools and deep divisions over spending cuts and tax policy.

Budget 2026 under pressure: The Senate has started examining the 2026 State budget after the National Assembly rejected the first part of the finance bill dealing with revenues. At the same time, negotiations over the social security budget collapsed in a joint committee, sending the text back to the lower house without an agreement.
Deficit targets: The government aims to reduce the public deficit from around 5.4% of GDP in 2025 to 4.7% in 2026, and to bring it below the 3% threshold by 2029. These targets are ambitious in a context of modest growth and rising interest costs, and S&P explicitly cited doubts about the credibility and political feasibility of such a consolidation path when it downgraded France in October.
EU pressure but some support: The European Commission recently judged that France is, for now, broadly respecting the commitments it has given on deficit reduction, but warned that there is “considerable uncertainty” surrounding the final form and implementation of the budget. This mixed assessment underscores the delicate balancing act between EU fiscal rules and domestic political constraints.

The combination of a divided parliament, strong social resistance to spending cuts or tax rises and the need to respect European deficit rules is at the heart of the agencies’ concerns. Any sign that reforms are stalling or that the deficit reduction timetable will slip could put renewed downward pressure on France’s rating in future reviews.

How markets and the government are reacting

So far, financial markets have absorbed the downgrades without panic, although French government bond yields now carry a slightly higher premium over German Bunds than in previous years. Investors appear reassured that France remains a large, diversified and relatively wealthy economy at the core of the euro area, but they are demanding a bit more compensation for the higher fiscal risk.

On the political side:

Official response: Economy and finance minister Roland Lescure said the government takes note of S&P’s choice to maintain the A+ rating and stable outlook, highlighting the executive’s intention to stick to its deficit‑reduction roadmap. The authorities present the decision as a sign that their strategy still retains some credibility, even if the downgrade in October was a clear warning.
Policy implications: To reassure agencies and markets, the government will likely need to confirm concrete measures on spending control, pension and labour‑market reforms and possibly targeted revenue increases over the coming years. Failure to deliver could increase the risk of another downgrade, especially if growth weakens or political instability worsens.

For households and businesses, the impact is indirect but real: higher sovereign borrowing costs can eventually feed through into higher interest rates on mortgages, business loans and local government financing, particularly if France’s risk premium continues to widen over time.

What this means for expats, savers and investors

For English‑speaking residents in France and international investors with exposure to French assets, the A+ rating with stable outlook sends a nuanced message: France remains a solid, investment‑grade borrower, but the margin for fiscal error is shrinking.

Key takeaways include:

No immediate credit crisis: There is no suggestion that France is at risk of default; the issue is the long‑term sustainability of high debt and repeated deficits. For most residents, daily life continues unchanged, although fiscal consolidation could mean tighter public spending or targeted tax changes in the years ahead.
Watch future reviews: The next formal rating reviews by S&P, Fitch and Moody’s will be crucial moments, especially if the 2026 budget is watered down or growth disappoints. Any further downgrade would increase France’s borrowing costs and could affect sentiment towards French bonds, equities and real estate.
Importance of reforms: Structural reforms that boost growth, improve labour‑market performance and curb spending pressures (notably on pensions and healthcare) are likely to be closely watched by rating agencies. A credible medium‑term strategy combining reforms and gradual deficit reduction is the best way for France to stabilise its rating and, eventually, regain lost ground.