France finds itself caught in a deepening economic and political storm this September, with the nation’s financial credibility shaken and its government teetering on the edge. The latest blow came on Friday, September 12, 2025, when international credit agency Fitch downgraded France’s credit rating, citing the country’s high and rising debt ratio and a political leadership too divided to implement meaningful reforms. It’s a moment that, as TradingEconomics.com notes, leaves France with the lowest credit rating on record from a major agency—a stinging indictment of the government’s management and a warning flare for Europe at large.
Fitch’s report pulls no punches, declaring that France’s general government debt ratio is set to climb from 113.2% of GDP in 2024 to a staggering 121% in 2027, with no clear path to stabilization. That’s not just high—it’s 15 percentage points above the 2019 level, and now the third highest among sovereigns in the ‘A’ and ‘AA’ rating categories. The agency is blunt: “France’s general government debt ratio will continue to rise, reflecting persistent primary fiscal deficits.”
Even more troubling, the French government has shown little ability to reverse course. Fitch points out that the country’s headline fiscal deficit has exceeded 3% of GDP in all but three of the past 20 years, and there hasn’t been a primary fiscal surplus since 2001. Looking ahead, the agency forecasts that the consolidated French budget deficit “will remain above 5.0% of GDP in 2026-2027,” even if the government manages to implement annual fiscal-tightening measures of 0.5%. In other words: the hole is getting deeper, and the ladder out is nowhere in sight.
But the numbers only tell part of the story. France’s political system is in disarray, with instability at the top fueling the fiscal crisis. Since the snap legislative elections in mid-2024, the country has cycled through three different governments. Prime ministers have come and gone at dizzying speed, each falling victim to the National Assembly’s refusal to unite around the need for tough fiscal medicine. As Fitch notes, “The government’s defeat in a confidence vote illustrates the increased fragmentation and polarization of domestic politics.”
The latest casualty was Prime Minister François Bayrou, who lost a critical confidence vote in the National Assembly on September 8, 2025, burying his unpopular €44 billion austerity plan for the 2026 budget. His ouster marked yet another setback for President Emmanuel Macron, whose centrist and conservative allies now control just over a third of the lower house. As The Nation reports, Bayrou’s defeat was widely seen as a rejection of Macron’s leadership and fiscal strategy, sparking a wave of demonstrations across France.
On September 10, hundreds of thousands of protesters took to the streets, from shopping malls and roundabouts to high schools and highway toll booths. Healthcare workers striking outside Tenon Hospital in Paris joined the chorus, demanding not just better conditions but a fundamental change in direction. “Our goal is to construct a multifaceted and durable opposition,” said Jalel, a striking doctor, underscoring the movement’s determination to outlast a single day of action.
The protests, which opinion polls show are supported by roughly half the country, were met with a massive police response: some 80,000 officers were deployed nationwide, and 540 protesters were arrested. The unrest has only intensified the sense that France’s political system is stretched to its limits, with Macron’s authority crumbling and his popularity at a record low—just 17% according to one recent study.
Amid the turmoil, Macron appointed Sebastien Lecornu as the new Prime Minister on September 9, replacing Bayrou. Lecornu, a longtime ally and former defense minister, quickly acknowledged the need for a “change of method” as he took office. But his appointment was denounced as a “provocation” by both protesters and opposition politicians, who saw it as evidence that Macron was doubling down on his inner circle rather than reaching for genuine consensus.
Lecornu’s immediate challenge is to craft a 2026 budget that can pass through a deeply divided National Assembly. The center-left Socialists, whose support he needs, are demanding increased taxation on the ultra-wealthy and a rollback of Macron’s previous pension reforms in exchange for any deal. But such concessions would strain ties with the conservative Republicans, further complicating the already fraught coalition dynamics.
The far right, led by Marine Le Pen’s National Rally, is also waiting in the wings, demanding a new dissolution of parliament and fresh elections as the price for any support. Le Pen was quick to respond to Lecornu’s nomination, writing on X: “The president has only a few cartridges left, holed up in his bunker with a small bunch of loyalists. After the inevitable future parliamentary elections, the prime minister will be Jordan Bardella.” Polls suggest the far right would come out on top in a new vote, adding yet another layer of uncertainty to France’s political future.
Meanwhile, the left-wing opposition remains divided, with the Socialists and the far-left France Unbowed (LFI) unable to unite behind a common strategy. Both parties have ruled out a full reboot of their previous alliance, and union leaders are struggling to rise above the acrimony. As The Nation observes, the growing power vacuum only increases the risk of further instability, with new elections perhaps the only way out of the stalemate.
Amid all this, calls for a return to tax-the-rich policies are gaining traction across the political spectrum. Demonstrators in Toulouse on September 10 called for the reinstatement of the wealth tax (ISF), a move supported by parties from the far left to the far right as Prime Minister Lecornu scrambles to secure support for the 2026 budget. Both of Lecornu’s predecessors were ousted over failed fiscal plans, highlighting the deep divisions over how to address the budget crisis.
The international financial markets have not been blind to these developments. On Monday, September 15, France’s borrowing costs rose sharply in response to Fitch’s downgrade, with the yield on the benchmark 10-year government bond jumping 7 basis points and the 30-year bond rising 8 basis points, according to CNBC. While there was a market counter-reaction later in the day, the specter of further downgrades—and steeper borrowing costs—looms large.
Unlike during the Great Recession, when the European Central Bank (ECB) could step in to stabilize markets by buying up government debt, the ECB’s hands are now tied by the risk of stoking inflation. Years of easy money and the pandemic’s liquidity surge have left Europe awash in cash, making any new intervention fraught with danger. As Fitch and economic experts warn, the ECB’s limited capacity to monetize sovereign debt means France—and Europe as a whole—faces a far more perilous road ahead.
Germany, by contrast, has so far avoided similar turmoil. As experts at Fiscal Future noted on September 17, Germany’s forward-looking fiscal policy has helped maintain confidence in the state’s ability to act, offering a stark contrast to France’s current predicament. But as the crisis in Paris deepens, even Berlin is watching nervously, knowing that the fate of Europe’s second-largest economy could have far-reaching consequences.
The coming weeks will test France’s political class as never before. With the 2027 presidential election looming and the threat of further downgrades hanging over the country, the pressure is on to find a path out of the crisis. Whether Macron, Lecornu, or their rivals can rise to the challenge remains to be seen—but for now, the world is watching, and the stakes could hardly be higher.
