France's Lescure Presses for 2027 Budget by Year-End After Fitch Cuts Outlook to Negative

France’s Economy and Finance Minister Roland Lescure has called for a “responsible” 2027 budget to be adopted before the end of the year, after Fitch Ratings cut the outlook on the country’s A+ sovereign rating from stable to negative on Friday, Euronews reported.

In a statement sent to the media on Friday evening, Lescure said the government took note of Fitch’s decision. Bloomberg quoted the statement as saying: “The government remains fully committed to fiscal consolidation,” with the aim of bringing the deficit down to 5%. Lescure said the agency’s assessment underlined the pressing need to pass a budget before year-end, and that businesses and investors needed a clear sense of direction, according to Bloomberg.

Speaking to Franceinfo on Friday, Lescure described the economy as being at a standstill and warned that France would be heading into the wall if the budget were not adopted, Euronews reported. He told the broadcaster: “we need a budget, we need a budget deficit of 5% or less.”

Why Fitch acted

Fitch said the outlook change, made in an unscheduled review, reflects a deterioration since its August 2026 assessment, pointing to weaker growth, higher borrowing costs and a wider deficit. According to Bloomberg, the agency estimated that the cumulative fiscal adjustment needed to stabilise France’s debt has risen to around 3.5% of GDP, from 3.0% in August. Fitch also cited persistent political fragmentation and a difficult social climate.

Bloomberg reported that this year’s deficit is set to reach 5.4% of economic output. The Private Banker, citing Reuters and Investing.com, reported that Fitch projects a 2027 deficit of 5.5%, above the government’s 5% target, and sees general government debt rising to about 124% of GDP by 2028 from 115.7% in 2025.

Fitch said the rating remains supported by the size, wealth and diversification of the French economy, the strength of its institutions, euro area membership and a resilient banking sector, Euronews reported.

Economy and bond markets

The move came hours after statistics agency Insee reported that French GDP fell 0.1% in the third quarter, following stagnation in the second quarter and a 0.2% contraction in the first, according to Euronews. The Private Banker, citing Reuters, said Lescure attributed the weakness to an “unprecedented mix of external and internal shocks.”

Bloomberg reported that French yields rose more than those of any other developed market this month. The 10-year spread over German debt reached 178 basis points in October, compared with 85 basis points at the start of September, and stood around 165 on Friday. Moody’s kept France at Aa3 with a negative outlook days earlier, The Private Banker reported, citing Reuters.

What’s next

Prime Minister Sébastien Lecornu has proposed a finance bill to constrain spending and raise tax revenue to meet the 5% deficit goal next year, but its fate is uncertain as he lacks a parliamentary majority, Bloomberg reported. Lescure has said the government does not rule out using Article 49.3 of the Constitution, while the other option, passing the budget by ordinance, has never been used for a budget since the Fifth Republic began in 1958, according to Euronews.

Fitch said it expects the budget to be adopted through the constitutional mechanisms available to the government. Jérôme Mathis, an economics professor at Paris-Dauphine University, told Euronews: “Markets generally prefer a contested decision to a prolonged absence of decision.” Fitch’s next scheduled review of France should conclude by the end of February, Bloomberg reported, with the presidential election about six months away.

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