Fitch Cuts France Outlook to Negative as GDP Contracts; Paris Vows "Responsible" 2027 Budget

Fitch lowered France's sovereign debt outlook from "stable" to "negative" while affirming its A+ rating, citing weaker growth, higher borrowing costs and a larger deficit than at its August review. The downgrade in outlook followed data showing French GDP fell 0.1% in the third quarter, after stagnating in the second and contracting 0.2% in the first. The agency pointed to "persistent political fragmentation" and a "difficult social climate" that "complicate the implementation of a lasting fiscal consolidation." It said France's rating remains supported by the size and diversification of its economy, its institutions, euro-area membership and banking-sector resilience. Economy and Finance Minister Roland Lescure said he "takes note" of the decision and reiterated the "absolute need" to adopt a responsible budget by year-end cutting the deficit to 5%. With no parliamentary majority, he has not ruled out using Article 49.3 or ordinances to pass the text. Fitch expects the budget to be adopted through constitutional mechanisms despite the deadlock.