The suspension of the pensions law until the 2027 presidential election was a notable concession to the Socialist Party, impacting a key achievement of French President Emmanuel Macron.
S&P noted that uncertainty around public finances remains high before the 2027 elections, citing the government’s choice to pause France’s significant pension reform, initially passed in 2023. It projects France’s economic growth will be 0.7 percent this year and anticipates a “muted recovery” in 2026.
The rating agency highlighted significant risks to growth, particularly due to the potential impact of increased government borrowing costs on economic financing. S&P predicts the 2025 budget deficit will meet the 5.4 percent of GDP target but expects a slower budgetary consolidation without substantial deficit-reducing measures.
Following S&P’s downgrade, French Economy and Finance Minister Roland Lescure confirmed the 2025 deficit target and stated the 2026 draft budget should reduce the budget gap to 4.7 percent of GDP next year.
Nevertheless, France’s government debt is expected to rise, reaching 121 percent of GDP by 2028, compared to 112 percent last year, according to S&P.
Giorgio Leali contributed reporting.
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