France's Credit Rating Stable Despite Economic Challenges

Moody’s Ratings has kept France’s credit rating at Aa3 with a negative outlook, highlighting political instability, social unrest, and increasing borrowing costs as significant challenges.

In a review published on October 23, Moody’s projected that France’s public debt will surpass 120% of its gross domestic product (GDP) by 2027. The agency anticipates that the country’s budget deficit will decrease to 5.2% of GDP in 2027, slightly above the government’s target of 5%.

Moody’s expects the next government to adopt a deficit-reducing budget, potentially through executive decrees, despite a fragmented political landscape. However, further fiscal consolidation is anticipated to be challenging after the 2027 presidential election due to persistent social tensions and a divided parliament.

France’s borrowing costs have surged, with the 10-year government bond yield increasing by about 150 basis points since the start of 2026. This rise is largely due to a widening spread over German government bonds, adding pressure to the country’s public finances.

Moody’s negative outlook underscores the risk of political fragility and economic challenges that could impact France’s fiscal health.

CONTEXT: France’s economic challenges, including rising debt and political instability, are significant concerns for its fiscal health. The country’s credit rating reflects its strong economy and institutions but faces pressure from a divided political landscape and increasing debt burden.