France, long considered a pillar of economic stability within the euro area, now finds itself at the center of a mounting fiscal and political storm. In a week marked by dramatic shifts, France suffered two sovereign credit rating downgrades—first on September 19, then again on September 22, 2025. According to Fitch Ratings, the country’s national credit rating fell from 'AA' to 'A+', underscoring the severity of the crisis. Meanwhile, Italy, once the eurozone’s perennial fiscal problem child, received its first credit rating upgrade from Fitch since 2021. The gap between the two countries' credit standings has narrowed to just three notches, as reported by Fitch, signaling a remarkable reversal of roles within the European Union.
This reversal is not just a matter of numbers on a ratings report. It’s a reflection of deepening unrest and structural challenges that have erupted onto the streets of France. On September 18, the city of Montpellier echoed with the voices of protesters shouting anti-government slogans, targeting what they called the government’s “budget of fear.” The Associated Press reported that just a day after the appointment of a new prime minister, a staggering 175,000 people participated in 812 rallies, demonstrations, and road blockades across the country. Police presence was heavy near iconic tourist spots like the Tuileries Garden and the Eiffel Tower, and the usual romance of Parisian attractions, even at the newly restored Notre Dame Cathedral, was nowhere in sight. Hundreds of demonstrators were arrested, and the unrest showed little sign of abating.
Since the summer of 2025, President Emmanuel Macron has faced relentless opposition. Protesters, emboldened and organized through encrypted chats and social media, have staged guerrilla actions—blockades, strikes, and spontaneous protests—across French cities. The pressure reached a boiling point when former Prime Minister Francois Byru was ousted through a parliamentary vote of confidence. In a bid to restore order, Macron appointed Defense Minister Sebastian LeCornu as the new prime minister before September 22. Yet, the backlash only intensified, as many saw the choice of another right-leaning leader as tone-deaf to the left-wing coalition that holds a majority in the House of Representatives.
The roots of France’s current crisis are tangled in decades of accumulated structural issues, but recent decisions have exacerbated the situation. France’s social welfare spending is among the highest in the world, accounting for more than 30% of its gross domestic product (GDP). Between 2020 and 2021, the country spent 170 billion euros—about 10% of GDP—on measures to combat the COVID-19 pandemic. The subsequent energy crisis, triggered by the Russia-Ukraine war, prompted another 72 billion euros in subsidies. These unpredictable shocks collided with a series of major tax cuts implemented by Macron: the abolition of the wealth tax in 2018, eased real estate holding taxes, a flat capital income tax of 30%, and a reduction in corporate tax from 33% to 25%.
Despite these tax breaks, which were designed to stimulate investment and economic growth, public spending did not decrease. Instead, the national debt ballooned. When Macron took office, France’s debt stood at 2.2 trillion euros. By 2025, that figure had swelled to 3.3 trillion euros, pushing the debt-to-GDP ratio to 114.1%—the third highest in the European Union. According to Yonhap News Agency, France has now replaced Italy as the euro area’s fiscal flash-point, with its 10-year Treasury bond rate rising even higher than Greece’s. The specter of a potential International Monetary Fund (IMF) bailout, once unthinkable for France, is now openly discussed in policy circles.
The political consequences have been swift and severe. Former Prime Minister Byru’s downfall came after he failed to pass a 44 billion euro budget deficit reduction plan. The inability to rein in spending, coupled with persistent political instability, prompted Fitch to lower France’s credit rating right as the new cabinet was being formed. "The downgrade reflects the government’s inability to address the growing debt burden amid ongoing political turmoil," Fitch noted in its assessment.
Even the much-anticipated Paris Olympics of 2024, which were supposed to mark a triumphant return for French tourism and inject $12 billion into the economy, fell short of expectations. The government spent about $8.8 billion on the games, but the economic windfall failed to materialize. Inflation, increased security costs, and restrictive traffic controls all played a part in dampening the hoped-for “Olympics special.” In fact, there were reports of "vacancy" in the city during the games, as sky-high prices and logistical headaches discouraged both domestic and international visitors.
The aftershocks are still being felt a year later. The Louvre, for instance, has hiked its admission fee by 30% to 22 euros since 2024, and public transportation fares for foreigners have doubled. These moves, intended to shore up public finances, have instead poured cold water on Paris’s allure. Tourists now complain of high prices, security concerns, and a diminished sense of magic in the French capital. Daniel, an American tourist interviewed by Yonhap News Agency, summed up the mood: "The security is unstable and the prices are high. The fantasy is broken in Paris, where there is no air conditioner because of the heat wave."
Meanwhile, the government’s efforts to balance the books have only deepened public resentment. The austerity budget, which many protesters deride as a "budget of fear," has failed to win over the population. The left-wing coalition in parliament remains at odds with Macron’s administration, and the appointment of a fourth prime minister this year has not calmed the waters. The country’s famed social model, once the envy of Europe, now appears increasingly unsustainable under the weight of mounting debt and political paralysis.
France’s predicament is a cautionary tale for other advanced economies grappling with the twin pressures of social spending and fiscal discipline. As the euro area watches closely, the question remains: can France pull itself back from the brink, or will its fiscal woes deepen further? For now, the City of Light finds itself in the shadow of a crisis that shows no sign of fading.