Fitch Sees French Debt Rising to 124% of GDP in 2028 and Cuts Outlook to Negative

Key Facts

On October 30, Fitch cut France’s outlook from stable to negative while keeping its sovereign rating at A+, signaling rising debt risks and difficulty controlling public finances. The agency attributed the decision to weak growth, higher borrowing costs and a wider deficit since its review in August. It also said political divisions weaken the prospects for passing sustainable fiscal measures. Fitch said the political debate emerging ahead of the presidential election “has not strengthened its confidence in the prospects for a lasting deficit reduction that could lead to debt stabilization.” The outlook revision adds pressure on the government as it faces a political challenge over the budget and spending cuts.

Fitch expects the debt-to-GDP ratio to rise to about 124% in 2028, from 115.7% in 2025 under the agency’s baseline. This trajectory reflects continued debt accumulation despite the need to reduce the deficit, while the agency expects the deficit to reach 5.5% of GDP in 2027. Fitch linked its deficit forecast to a weaker growth assessment and the possibility of concessions in the budget process. Debt-servicing costs further constrain fiscal room: the agency expects government interest payments to rise to 3.3% of GDP in 2028, from 2.5% in 2025. The expected increase in debt will therefore coincide with a larger share of revenue going toward interest.

The sensitivity of debt markets to this trajectory is reflected in the yield on French 10-year bonds, which exceeded 5.14% in the week before Fitch’s decision, its highest level since 2002. Reuters said the yield had risen faster than those of most peers amid investor concerns about the direction of public finances, the difficulty of passing the budget and social unrest. This level puts borrowing costs at the top of the government’s challenges, alongside the need for deficit-reduction measures. Higher yields also add to budgetary pressure by increasing financing costs, at a time when Fitch expects interest payments to rise in the coming years. Passing a sustainable fiscal plan remains a key factor in restoring confidence in the debt trajectory.

Fitch’s decision does not reflect an absence of credit strengths: the agency said France benefits from a large, wealthy and diversified economy, strong institutions, eurozone membership and a resilient banking sector, factors that support its A+ rating. But these strengths have not dispelled the agency’s concerns about the debt trajectory and the government’s ability to deliver sustainable fiscal consolidation. Fitch’s position came days after Moody’s affirmed France’s rating at Aa3 with a negative outlook. Moody’s said its assessment assumes the adoption of a 2027 budget that reduces the deficit, alongside a decline in financing pressures and social tensions over the coming months. This makes the next budget a shared focus in both agencies’ assessment of France’s ability to rein in the deficit.

Fitch expects to review France’s rating by the end of February 2027 at the latest, without specifying a date. The review will follow a test of the government’s ability to pass a 2027 budget and reduce the deficit, a step Moody’s assumed when it affirmed its rating at Aa3. In the near term, the shift to a negative outlook adds pressure on the government ahead of protests planned for the weekend. Coverage links the protests to the political challenge of implementing spending cuts and deficit-reduction measures. The National Institute of Statistics and Economic Studies is scheduled to publish final October inflation data on November 13, 2026, followed by the preliminary estimate for November inflation on November 27, 2026.