Permanent political crisis
Rating agency FITCH downgrades France’s creditworthiness
The mountain of debt is huge, the government was broken again – and the chance of economic reforms minimally. Now it should also be more expensive for Paris to get money on the capital market.
The rating agency FITCH has downgraded France’s creditworthiness and the stumbling government in Paris made it difficult to finance its government debt. The creditworthiness of the second largest economy in the euro zone was reduced from AA- to A+, as Fitch announced on Saturday night. This should make it a little more expensive for France to get money on government bonds on the capital market.
As reasons for the decision, FITCH cited, among other things, the high and probably increasing public debt as well as the low chances of success for economic reforms due to domestic polarization and a lack of political stability in France. One symbol for this is that there have been three different governments since mid -2024. Most recently on Monday evening Prime Minister François Bayrou had lost a question of trust in parliament after less than nine months in office and then his post at the head of the minority government.
In terms of economic output, France has the third highest debt rate in the EU to Greece and Italy with 114 percent. In absolute figures, the highest debt mountain in the euro zone is placed in the country with around 3,300 billion euros. Government spending are also among the highest in Europe. The budget deficit was last 5.8 percent. The EU opened a deficit procedure against France in July 2024.
dpa
Source: Stern
