Moody's Affirms France at Aa3 With Negative Outlook as Political Gridlock and Record Debt Threaten Fiscal Consolidation

Moody's kept France's sovereign rating at Aa3 with a negative outlook late Friday, warning that political fragmentation and social unrest threaten the government's ability to reduce a record debt burden. Fitch and S&P Global rate France one notch lower. Moody's cited France's divided parliament, prolonged protests that erupted into riots last weekend, and bond yields at 24-year highs. Public debt stands at a record $4 trillion, or 119% of GDP, the highest ratio since the aftermath of World War II. The agency expects the 2027 budget—targeting a deficit of 5% of GDP, down from 5.4%—to pass, possibly by decree, but forecasts only a reduction to 5.2% due to weaker growth and difficulty enacting spending cuts. Moody's projects debt will reach 122% of GDP next year and continue rising through the decade, warning that a fragmented political landscape may prevent the next president and government from delivering the rapid fiscal consolidation needed to stabilize the debt burden.