Rating action

Scope Ratings GmbH (Scope) has today affirmed France’s long-term issuer and senior unsecured debt ratings in local and foreign currency at AA- and revised the Outlooks to Negative, from Stable. The short-term issuer ratings in local and foreign currency have been affirmed at S-1+, with Stable Outlooks.

The revision of the Outlook to Negative is driven by:

• A significantly weaker fiscal outlook. High budget deficits and growing uncertainty on the sustained execution of the government’s consolidation plan underpin Scope’s revised projection, under which the general government deficit is set to average 5.4% of GDP by 2030. Spending pressures and a challenging economic outlook further weigh on general government debt which, in the absence of additional shocks, is set to increase to 125% of GDP by 2030 under Scope’s revised projection, one of the steepest increases among rating peers.
   
• A more challenging political outlook. Rising political instability, heightened political fragmentation and polarisation, and a challenging socio-economic outlook cloud the prospects for a broad-based political compromise to materially reduce the budget deficits and stabilise the debt-to-GDP trajectory. Social tensions and uncertainty surrounding economic and public policies pursued after the next presidential election further cloud the medium-term outlook.

The recent record of political instability driven by parliamentary debates on the public finance bill significantly increases the risk of legislative gridlock, leaving credit challenges unaddressed in the coming years, which would exert downward pressure on France’s AA- ratings. This contrasts with Scope’s previous baseline, which assumed governments would be able to navigate a fragmented National Assembly to advance important elements of a credible fiscal consolidation agenda until the presidential election in 2027.

The affirmation of France’s AA- credit ratings is underpinned by the country’s leading role in Europe’s economic, financial and security architecture; its large and diversified economy driven by high value-added activities, strong business climate, as well as sound and resilient banking sector; and its favourable debt profile and excellent capital market access.

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Key rating drivers

High budget deficits, increasingly uncertain fiscal consolidation prospects, and challenging economic conditions drive a continued increase in general government debt-to-GDP.

Scope projects the general government deficit at 5.6% of GDP in 2025, against 5.8% in 2024. For 2026, Scope expects the general government deficit to moderately decline to 5.4% of GDP, against a previous projection of 5.2%. The failure of prime minister Bayrou to gain confidence from the National Assembly on 8 September derails the saving plan of EUR 44bn (or around 1.5% of GDP) set out in July to reduce the deficit to 4.6% of GDP in 2026. The government’s plan included a nominal freeze on social benefits, pensions, and income tax bands, alongside local government savings and supply-side measures to bolster production¹.

Scope’s baseline is that the newly appointed prime minister Lecornu will remain strongly committed to fiscal consolidation but will significantly water down the initial saving plan to obtain the support of centre-right and/or centre-left parties to pass the 2026 budget. Although the recent political instability raises the risk of delays to approve the budget, the 2025 budget approved in February proved the flexibility of the governance framework. A centre-right majority in the Senate could also support the budgetary process. In an adverse scenario, Scope expects the budget deficit to moderately rise if no political compromise is reached with centre-right and/or centre-left parties around spending- and revenue-based measures.

Over the medium-term, Scope projects the general government deficit to average 5.3% of GDP between 2027 and 2030, up from the previous projection of 4.7% of GDP between 2026 and 2029. The prospects of higher deficits account for lower policy predictability and higher execution risks that could further derail fiscal consolidation in the coming years. These projections furthermore account for significant spending pressures stemming from ageing costs, energy and climate investment, as well as defence spending². Net interest payments are projected to rise steadily from less than 2% of GDP in 2024 (or 3.6% of general government revenue) to more than 3.5% of GDP (or 7% of revenue) by 2030.

A moderate, albeit resilient, economic activity further raises uncertainty on budgetary adjustments. The real GDP growth rate is projected at 0.7% in 2025, after 1.1% in 2024, and at 0.9% in 2026. Private consumption has remained resilient thanks to lower inflation (0.9% YoY in August) and a robust labour market, but high political uncertainty weighs on private demand, particularly on investment decisions. France’s exposure to the United States’ (AA/Negative) tariffs is limited³ but heightened global uncertainty weighs on economic prospects⁴. The real GDP growth rate is projected at 1.1% on average between 2027 and 2030.

On this basis, Scope projects the general government debt-to-GDP ratio to rise from 113.2% of GDP in 2024 to 116.5% in 2025 and about 125% by 2030, against a previous projection of 121% by 2029. The revised projection is driven by durably higher budget deficits, alongside a moderate growth and inflation outlook. France’s general government debt, which stood at 60% of GDP in 2001, is set to rise by 27 percentage points between 2019 and 2030, one of the steepest increases among credit rating peers, including Belgium (AA-/Negative; 20pps), the United Kingdom (AA/Stable; 30pps), and the United States (AA/Negative; 19pps), underpinning Scope’s decision to assign the Negative Outlook.

Rising political instability, heightened political fragmentation and polarisation, and a challenging socio-economic outlook raise the risk of policy paralysis.

France experiences political instability driven by budgetary debates, resulting in less ambitious fiscal consolidation measures than the government’s initial plan. In December 2024, prime minister Barnier’s government was voted down by the National Assembly (the first such event since 1962) after invoking the article 49.3 of the French constitution to pass the 2025 Social Security Financing Bill without a parliamentary vote. In September 2025, prime minister Bayrou also failed to obtain sufficient parliamentary support after calling for a confidence vote from the National Assembly (the first such event under the fifth republic) over the proposed policy agenda for the 2026 public finance bill.

Since president Macron dissolved the National Assembly in June 2024 (the previous such occasion was back in 1997), the short-lived centre-right governments collapsing during budgetary debates underscore the strong political opposition to the government’s agenda within a highly fragmented parliament. The recent instability raises the risk of policy paralysis or further instability by the next presidential election. President Macron appointed centre-right prime minister Lecornu on 10 September, the third change in premiership within 12 months and the fifth since 2022.

Heightened political fragmentation and polarisation further stall the reform momentum. The presidential party Renaissance lost its parliamentary majority during the 2022 elections, while the far-right party Rassemblement National and the radical-left coalition Nouveau Front Populaire achieved material gains in the National Assembly during the 2024 snap elections. The current parliamentary setting constrains the government’s ability to secure sufficient political support to materially advance its policy agenda. Similarly, the introduction of reforms without a parliamentary vote is compromised by a highly fragmented parliament, the recent record of political instability and the upcoming elections, that altogether increase the risk that the government would be voted out by the National Assembly. According to opinion polls, hypothetical early legislative elections could result in an equally fragmented or even more polarised parliament.

A challenging socio-economic outlook further clouds the prospects for structural reforms. The government’s room for manoeuvre to materially advance its policy agenda is constrained by moderate economic activity, reflected in the projected stabilisation of the unemployment rate between 7.6% and 7.9% in 2026^{5, 6}, against 7.5% in Q2 2025. Moreover, a record of social tensions over 2018-20 (‘yellow vests’ movement), September’s 2025 protests and upcoming electoral milestones (municipal elections in March 2026, presidential election in April-May 2027) further reduce policy flexibility, particularly amid a relatively high tax-to-GDP ratio and rigid public spending, including social and healthcare. Finally, the uncertainty surrounding economic and public policies pursued after the next presidential election further clouds the outlook.

Credit rating strengths: leading role in Europe, economic resilience, robust banking sector, favourable debt profile, and excellent market access.

France’s AA- credit ratings are supported by its euro area membership as an EU founding member, leading guarantor of the European institutional framework and driver of European integration. Its international role, longstanding investment in defence and nuclear production capacities, which are supported by a large industrial base, further bolster the credit profile of France in the current geopolitical environment. The European Commission (AAA/Stable) plans a tentative allocation of EUR 16.2bn to France under its defence-related instrument ‘Security Action for Europe’.

Moreover, the AA- ratings are supported by France’s economic resilience underpinned by its large economy, high GDP per capita and diversified economic structure driven by high value-added activities and strong business climate. The economy benefits from a robust banking sector with strong capitalisation and favourable liquidity metrics, as well as a high household savings rate and robust corporate balance sheets strengthening the shock absorption capacity. The economy is also well-positioned for the green and digital transitions, which further supports economic resilience.

Finally, the AA- ratings are supported by France’s favourable debt profile, with a long average maturity, excellent market access, underpinned by a well-diversified investor base and strong debt management. Euro area membership further supports liquidity including through the ECB policy instruments.

Rating-change drivers

The Negative Outlook reflects Scope’s view that risks to the ratings are skewed to the downside over the coming 12 to 18 months.

Upside scenarios for the ratings and Outlooks are (individually or collectively):

1. Stronger fiscal outlook, improving the general government debt-to-GDP trajectory; and/or
    
2. Stronger economic growth outlook and potential driven by sustained reform implementation.

Downside scenarios for the ratings and Outlooks are (individually or collectively):

1. Weaker fiscal outlook, further worsening the government debt-to-GDP trajectory over the medium-term;
    
2. Weaker governance outlook and sustained political instability preventing the implementation of reforms and adoption of ambitious fiscal consolidation measures; and/or
    
3. Major policy shifts challenging France’s leading role in Europe.

Sovereign Quantitative Model (SQM) and Qualitative Scorecard (QS)

Scope’s SQM, which assesses core sovereign credit fundamentals, signals a first indicative credit rating of ‘a+’ for France. Under Scope’s methodology, the indicative rating receives 1) a one-notch positive adjustment from the methodological reserve-currency adjustment; and 2) no adjustment from the methodological political-risk quantitative adjustment. On this basis, a final SQM quantitative rating of ‘aa-’ is reviewed by the Qualitative Scorecard (QS) and can be changed by up to three notches depending on France’s qualitative credit strengths or weaknesses compared against a peer group of sovereign states.

For France, the QS signals relative credit strengths against indicative sovereign peers for the following qualitative analytical category: i) macro-economic stability and sustainability; ii) debt profile and market access; and iii) environmental factors. Conversely, the relative QS credit weaknesses are signalled for: i) fiscal policy framework; ii) long-term debt trajectory; and iii) governance factors.

Combined relative credit strengths and weaknesses generate no adjustment via the QS and signals AA- credit ratings for France.

A rating committee has discussed and confirmed these results.

Environment, social and governance (ESG) factors

Scope explicitly factors in ESG issues in its ratings process via the sovereign-rating methodology’s stand-alone ESG sovereign-risk pillar, which holds a significant 25% weight under the quantitative model (SQM) and 20% weight under the methodology’s qualitative overlay (QS).

With respect to environmental factors, France performs strongly on carbon emissions per unit of GDP and natural disaster vulnerability relative to its rating peers. Although the transition towards carbon neutrality is more uncertain due to budgetary trade-offs and electoral milestones, the nuclear energy driving the country’s low-carbon electricity mix is expected to remain a key driver of the climate strategy, as reflected in the full nationalisation of the national utility provider and the planned investment into new reactors. Renewable energy is also expected to anchor the upcoming revision of the national low-carbon strategy. Moreover, France has embedded climate transition into its funding strategy, with a record of green bond issuances, and its state budget, by listing spending having a favourable environmental impact. Overall, this drives a ‘strong’ qualitative assessment relative to peers.

In terms of social factors, France displays demographic trends that compare favourably with those of most European peers, although the steady increase of the old-age-dependency ratio remains a challenge. While the implementation of the 2023 pension reform should mitigate the associated pressures on social spending, population ageing remains a constraint on long-term growth and fiscal outlooks. Labour market reforms introduced have driven a significant reduction in unemployment, even though a lower labour force participation rate relative to most of the credit rating peers reflects ongoing bottlenecks. This drives a ‘neutral’ qualitative assessment relative to peers.

For governance-related factors, France’s scores are in line with rating peers, as assessed by the World Bank’s Worldwide Governance Indicators. France has strong and effective institutions, but political fragmentation and polarisation complicate policymaking and increase the risk of instability. Following the early legislative elections in June-July 2024, the government was voted out by the National Assembly in December 2024 and again resigned in September 2025. This drives a ‘weak’ qualitative assessment relative to peers.

Rating committee
The main points discussed by the rating committee were: i) domestic economic risk; ii) public finance risk; iii) external economic risk; iv) financial stability risk; v) ESG-related risk; and vi) rating peers.

Rating driver references
1. Prime Minister Office, Budget Plan, July 2025
2. IMF, Article IV Consultation, July 2025
3. Direction générale du Trésor, Perspectives mondiales, September 2025
4. INSEE, Note de conjoncture, September 2025
5. Unédic, Prévisions financières, June 2025
6. Banque de France, Projections macroéconomiques, September 2025

Methodology
The methodology used for these Credit Ratings and/or Outlooks, (Sovereign Rating Methodology, 27 January 2025), is available on scoperatings.com/governance-and-policies/rating-governance/methodologies
The model used for these Credit Ratings and/or Outlooks is (Sovereign Quantitative Model Version 4.1), available in Scope Ratings’ list of models, published under scoperatings.com/governance-and-policies/rating-governance/methodologies.
Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Rating Definitions – Credit Ratings, Ancillary and Other Services’, published on scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at scoperatings.com/governance-and-policies/regulatory/eu-regulation. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): registers.esma.europa.eu/cerep-publication. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on scoperatings.com/governance-and-policies/rating-governance/methodologies.
The Outlook indicates the most likely direction of the Credit Ratings if the Credit Ratings were to change within the next 12 to 18 months.

Solicitation, key sources and quality of information
The Credit Ratings were not requested by the Rated Entity or its Related Third Parties. The Credit Rating process was conducted:
With Rated Entity or Related Third Party participation       YES
With access to internal documents                                    YES
With access to management                                             YES
The following substantially material sources of information were used to prepare the Credit Ratings: public domain and the Rated Entity.
Scope Ratings considers the quality of information available to Scope Ratings on the Rated Entity or instrument to be satisfactory. The information and data supporting these Credit Ratings originate from sources Scope Ratings considers to be reliable and accurate. Scope Ratings does not, however, independently verify the reliability and accuracy of the information and data.
Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Ratings and/or Outlooks and the principal grounds on which the Credit Ratings and/or Outlooks are based. Following that review, the Credit Ratings and/or Outlooks were not amended before being issued.

Regulatory disclosures
These Credit Ratings and/or Outlooks are issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings and/or Outlooks are UK-endorsed.
Lead analyst: Thomas Gillet, Director
Person responsible for approval of the Credit Ratings: Alvise Lennkh-Yunus, Managing Director
The Credit Ratings/Outlooks were first released by Scope Ratings in January 2003. The Credit Ratings/Outlooks were last updated on 18 October 2024.

Potential conflicts
See scoperatings.com under Governance & Policies/Regulatory for a list of potential conflicts of interest disclosures related to the issuance of Credit Ratings, as well as a list of Ancillary Services and certain non-Credit Rating Agency services provided to Rated Entities and/or Related Third Parties.

Conditions of use / exclusion of liability
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