France hit with debt warning after surprise S&P downgrade

France has been dealt a significant financial blow following S&P Global Ratings’ surprise decision to downgrade the country’s credit rating, which keeps pressure on its public finances and dampens hopes for how quickly it can reduce its debt. S&P downgraded France’s long-term sovereign rating to A+ from AA- with a stable outlook in a surprise ￰0￱ uncertainty also remains high even after the government submitted its draft budget for 2025, the agency ￰1￱ cut leaves France with just a single-A rating from two of the world’s three largest credit ratings agencies — after Fitch Ratings downgraded its rating in September — and underscores concerns about the trajectory of the country’s ￰2￱ lowering of the rating is due to a relatively slower pace of fiscal consolidation than anticipated ￰3￱ with real (inflation-adjusted) GDP growth projected to be close to 1% in 2025, health spending, energy subsidies, and local government transfers all weigh down the mix.

France’s budget shortfall is projected to decline only gradually, from 5.4% of GDP in 2024 to 4.7% in 2025, under the government’s draft ￰4￱ such specific plans to rein in costs or increase revenue, the path to reduce debt would be too slow for it to stabilize, S&P ￰5￱ stable outlook on the agency’s Bcc status reflects its opinion that a sound economy, a large domestic savings base, and a strong labor market will continue to support the country’s credit strength over the medium ￰6￱ it warned that another failure to address deficits could rekindle ￰7￱ monitor borrowing costs The demotion is arriving as international investors closely track the cost of borrowing for advanced economies with rapidly growing debt burdens.

France, the eurozone’s second-largest economy, faces higher borrowing costs as yields remain elevated across the European ￰8￱ bond yields edged higher after the news was announced, with the 10-year OAT benchmark yield reaching above 3.4% at one point on Wednesday, according to Reuters ￰9￱ said the measure was unlikely to roil markets in the very short term, but could result in a rise in long-term borrowing costs if investor confidence wanes. S&P’s action, said François Doucet, an economist at Banque Palatine, highlighted how debt dynamics, rather than growth, had come to the ￰10￱ said that the downgrade was a warning to policymakers that running high deficits while interest rates were moving up could present longer-term ￰11￱ French Treasury stated that it was not deviating from its fiscal roadmap and that the country still maintained a solid investment-grade credit ￰12￱ aims to reduce the deficit to below 3% of national output by 2029, in line with European fiscal rules, according to Roland Lescure, its finance ￰13￱ maintains a stable economic outlook France enjoys a stable economy, and the perception of private individuals and business people also speaks in its ￰14￱ headwinds have impacted France’s economy, but it is better positioned than some of its peers due to a relatively broad industrial base and solid household ￰15￱ has remained near historically low levels , at 7.3%, and inflation has eased to 2.4%, its lowest level since ￰16￱ downside is that public spending was high and government debt was elevated due to the costs of the energy transition, defense expenditures, and social support ￰17￱ numbers have enormous ramifications not just for how the country functions in ordinary times, but far more when disaster ￰18￱ estimate that France allocates approximately 57% of its economic output to the government, a share that is among the highest in the Organization for Economic Co-operation and Development (OECD), a group of developed countries.

Still, despite these pressures, many analysts say there is no imminent danger to France’s capacity to pay its ￰19￱ downgrade itself, in their opinion, was a signal that fiscal correction should be accelerated — not a warning of an imminent ￰20￱ up to Bybit and start trading with $30,050 in welcome gifts