Moody’s agency maintains France’s sovereign rating and highlights progress

This was the preferred scenario and it is positive news. The rating agency Moody’s maintained France’s sovereign rating late on Friday. It still classifies its debt as “good quality” despite a negative outlook, which opens the way to a possible future deterioration.

This good French quality is defined with an Aa3 rating, when its competitors Fitch and Standard & Poor’s have only granted it A+ since the fall of 2025. This latter classification characterizes a debt of “higher average quality”.

Moody’s notes that “the budgetary agreement reached between the moderate left and the center right, within a politically divided French Parliament, reinforces our assessment of the solidity of French institutions and governance.”

The rating agency also observes that “the budget deficit forecast for 2026”, at 5%, “is slightly lower than the previous forecast of 5.2% of GDP this year”. All of this constitutes “two positive elements for the solvency” of France. It also highlights the fact that the public deficit achieved in 2025, at 5.1% of GDP after 5.8% in 2024, is lower than its own forecast of 5.4%.

Uncertainty linked to the war in the Middle East

However, the rating agency argues that “the 2026 budget does not provide clarity on the measures that will be taken to reduce the deficit beyond this year”. In addition, “a significant risk remains that political parties will not be able to agree on new consolidation measures for 2027 and beyond.” Thus, “the negative outlook reflects the increased risk that the fragmentation of the French political landscape will continue to handicap the functioning of legislative institutions”.

Moody’s also fears that “the increase in borrowing costs of the French government due to the conflict in the Middle East represents a risk for our forecasts concerning the capacity to repay public debt”. It forecasts growth of 1% in 2026, “a slight acceleration compared to the growth of 0.9% recorded in 2025, with inflation reaching 1.4% in 2026 compared to 1% in 2025”. All this on the condition that “the effects of the conflict in the Middle East on energy prices and the global economy are ultimately contained”.

The presidential election, a high-stakes moment for economic choices

The Minister of Economy and Finance, Roland Lescure, simply “took note” of Moody’s decision. The status quo was generally expected by economists, especially since a public finance alert committee will be held on April 21, during which the ministry will unveil a possible adaptation of its macroeconomic forecasts.

The question of political instability which worries the rating agencies will undoubtedly return “from the summer” with the preparations for a budget “which promises to be very complicated” before the 2027 presidential election, notes Paul Chollet, chief economist of Crédit Mutuel Arkéa.

“Moody’s will then have more latitude to downgrade France in the fall. » “If I were a rating agency, I would not change the rating before the presidential election and the clarification of the economic debate,” said Xavier Ragot, president of the OFCE, the French Observatory of Economic Conditions.