Scope Ratings GmbH (Scope) monitors and reviews its credit ratings on an ongoing basis and at least annually, or every six months in the cases of sovereigns, sub-sovereigns and supranational organisations that may act as a lender of last resort.

Scope performs monitoring reviews to determine whether material changes and/or changes in macro-economic or financial-market conditions could have an impact on the credit ratings. Scope considers all available and relevant information when undertaking the monitoring review.

Monitoring reviews are conducted by performing a peer comparison, benchmarking against the rating-change drivers, and/or reviewing the credit rating’s performance over time, as deemed appropriate by the Lead Analyst or Analytical Team Head, in addition to an assessment of all aspects of the relevant methodology/ies, including key rating assumptions and model(s). Scope announces the result of each monitoring review on its website and/or on its subscription platform ScopeOne.

Scope completed the monitoring review for the French Republic (long-term local- and foreign-currency issuer and senior unsecured debt ratings: AA-/Stable Outlook; short-term local- and foreign-currency issuer ratings: S-1+/Stable Outlook) on 31 March 2025.

This monitoring note does not constitute a credit-rating action, nor does it indicate the likelihood that Scope will conduct a credit-rating action in the short term. Information about the latest credit-rating action connected with this monitoring note along with the associated ratings history can be found on scoperatings.com.

Key rating factors

For the updated rating report accompanying this review, please see here.

France’s credit ratings are supported by: i) its large and diversified economy driven by high value-added sectors; ii) its core euro area membership reflected in its role as an EU founding member and leading guarantor of the European institutional framework; iii) its favourable debt profile and excellent capital market access; and iv) its sound and resilient banking sector.

France’s credit ratings are challenged by: i) weak public finances reflected in sustained primary fiscal deficits, an uneven track record of fiscal consolidation, and rising general government debt-to-GDP; ii) high political fragmentation and polarisation alongside higher risk of political instability, limiting the ability to address structural pressures through ambitious reforms; and iii) a moderate growth potential.

Real GDP growth is projected at 0.7% in 2025, down from 1.1% in 2024. External demand is penalized by heightened geopolitical tensions and uncertainties on international tariffs. Private consumption and investment are constrained by fiscal consolidation measures and higher political uncertainty after early legislative elections in June 2024, the government collapse in December 2024, and delays in the approval of the 2025 budget. However, lower domestic inflation, more gradual than expected reduction of the fiscal deficit, and Germany’s fiscal stimulus could moderately support domestic economic activity. Real GDP growth is projected at 1.2% in 2026 and in 2027.

The fiscal deficit is projected at 5.6% of GDP in 2025, after 5.8% in 2024. This reflects the government’s revised target, from 5.0% in the draft budget to 5.4% in the public finance bill, accounting for its plan to increase defence spending, and reflecting a more pronounced economic slowdown relative to the original budgetary forecast. The government is committed to reduce the fiscal deficit, as reflected in the freeze of EUR 9bn of public funds in March 2025 and in the plan to strengthen the monitoring and management of public finances. However, this is balanced by limited flexibility to introduce material spending cuts and/or permanent tax hikes, as well as uncertain budgetary trade-offs to offset higher defence spending. The fiscal deficit is projected to decline to 5.2% of GDP in 2026 and 4.9% in 2027. A weaker economic momentum, materially higher defence spending, less favorable funding conditions, and renewed political instability are downside risks.

Moderate economic growth and the uncertain fiscal outlook weigh on the general government debt trajectory, projected to steadily rise from 113.0% of GDP in 2024 to 116.1% in 2025 and more than 120% by 2028-29, which is one of the highest ratios among euro area rating peers.

A fragmented political landscape and heightened political polarisation complicate budgetary consolidation measures and the introduction of structural reforms. The lack of government majority in parliament and of broad political support for spending cuts and/or tax hikes ahead of the 2026 municipal elections and 2027 general elections raise the risk of budgetary slippage. Negotiations about the 2023 pension reform could raise near-term political uncertainty. No confidence votes triggering government collapse and early elections are downside risks.

The Stable Outlook for France represents Scope Ratings’ view that risks for the ratings are balanced.

Upside scenarios for the long-term ratings are (individually or collectively):

1. Stronger fiscal outlook, with general government debt-to-GDP on a firmly declining trajectory;
    
2. Stronger economic growth outlook and potential driven by reform implementation.

Downside scenarios for the long-term ratings are (individually or collectively):

1. Significantly weaker governance outlook and major policy shifts challenging France’s leading role in Europe;
    
2. Significantly weaker fiscal outlook, leading to a more pronounced rise in government debt-to-GDP.

The methodology applicable for the reviewed ratings and/or rating Outlooks (Sovereign Rating Methodology, 27 January 2025) is available on scoperatings.com/governance-and-policies/rating-governance/methodologies.
This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
Lead analyst: Thomas Gillet, Director

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