PARIS (Reuters) – Global credit ratings agency S&P revised its outlook on France to negative from stable on Friday, citing rising debt, political gridlock on budget deficits and uncertain growth.
The agency also affirmed its rating for France at ‘AA-/A-1+’ after cutting it from AA last May.
France’s public finances spiralled out of control last year as a political crisis left four successive governments paralysed and incapable of tackling an unexpected drop in tax income and surge in spending for a second year.
“The negative outlook on France reflects rising government debt amid weak political consensus for tackling France’s large underlying budget deficits, against a backdrop of more uncertain economic growth prospects,” S&P said in a statement.
After weeks of delays, France’s latest prime minister, veteran centrist Francois Bayrou, passed the 2025 budget early this month, using special constitutional powers to avoid a vote in the lower house of parliament, where no party is close to holding a working majority.
The 2025 budget aims to cut the public sector deficit to 5.4% of output from 6% in 2024 through savings measures and tax increases, but will still leave France with one of the biggest fiscal shortfalls in the European Union.
In reaction to S&P’s move, the French Finance Ministry said that the government was determined to rein in the public finances and had put in place measures to ensure the 2025 budget is executed as planned.
(Reporting by Anandita Mehrotra in Benglauru and Leigh Thomas in Paris; Editing by Krishna Chandra Eluri and Daniel Wallis)
