How France’s Credit‑Rating Downgrade Affects UK Expats in France

France’s recent credit‑rating downgrade increases borrowing costs and could trickle into higher taxes and energy bills — what UK expats living in France need to know.

Published up‑to‑date: 24 October 2025

For UK nationals living in France, news of S&P Global downgrading France’s sovereign credit rating to A+ from AA‑ is more than just a headline — it can have real consequences for your finances, taxes and cost of living.  Here’s what you need to know, and how to take action.

What’s behind the downgrade?

Late October 2025 saw S&P reduce France’s rating, citing rising public‑debt levels (forecast to reach 121 % of GDP by 2028), ongoing political instability and fragile budget‑plans.  The French government is targeting a deficit of 4.7 % of GDP in 2026, down from about 5.4 % in 2025, but analysts doubt the target will be met. The key takeaway: the country’s borrowing costs may edge higher and that can filter into everyday life for residents.

Why UK expats in France should pay attention

As a UK‑expat in France, you may not hold French government bonds — but you *are* exposed indirectly:
– Higher borrowing costs mean the French state may need to raise taxes or cut subsidies.
– Energy and utility costs can rise if the state passes on rates to hit budget targets or repay higher interest.
– Cost‑of‑living in rural or semi‑rural areas (like where many UK expats live) is sensitive to inflation and public‑services pressure.
For example, if energy bills climb and French tax burdens increase, your euro‑based budget may be squeezed.

What practical steps you can take

1. **Review your budget in euros** — Check how your income (UK pension, freelance income, savings) stacks up against rising French costs.
2. **Lock in fixed‑rate contracts** — If you pay for French utilities on variable tariffs, consider switching to fixed‑rate plans while rates are still moderate.
3. **Audit tax‑ and pension‑planning** — With public finances under pressure, France may review taxation policies: ensure you are optimising your UK pension payments, declaring them correctly and keeping cross‑border advice up to date. For example, UK State Pension continues to be uprated in France under the bilateral treaty.
4. **Build a buffer and diversify** — Given the uncertainty, holding a cash buffer, hedging currency exposure (GBP/EUR) and thinking of passive income streams is sensible.

What to watch for in 2026

– **French tax announcements**: With S&P sceptical about the 2029 3 %‑deficit goal, the government may introduce new tax measures.
– **Energy‑price reforms**: The European Commission is ramping up actions to lower consumer energy costs – but the effect may come slowly and utility companies could raise tariffs.
– **Pension or social‑charges changes**: With fiscal strain, France may revisit social‑charges or pension‑benefit rules for residents; if you are a UK expat, this affects you directly.

How this ties into your UK pension and cross‑border finances

While your UK State Pension and private pensions are paid in GBP (or converted), the cost‑of‑living you face in France is in euros. A tightening French fiscal environment increases your living‑cost risk. Moreover, ensuring your UK pension is taxed optimally in France is key — a treaty exists, but you still must declare and navigate French tax.
If you haven’t yet, consider consulting a bilingual UK‑France pension specialist and review whether your income sources are well diversified (for example, holding some euro‑based investments or maintaining flexibility in currency).

**In summary:** The downgrade of France’s credit rating is a warning sign — not a crisis yet, but one to monitor. As a UK expat, you should treat it as an alert to review costs, lock in what you can, diversify risk and keep your cross‑border finances lean and ready.

Conclusion

While living in France continues to offer many lifestyle advantages for UK expats, financial landscapes change. The recent downgrade of France should prompt you to act — reviewing your budget, preparing for higher costs and aligning your UK‑France pension and tax planning. Taking action now means you’re less likely to be caught off‑guard later.