Public debt: Fitch rating agency downgrades France's rating

The Fitch rating agency has made its decision . On the evening of Friday, September 13, despite hopes of clemency, it downgraded France's sovereign rating from AA-, "high quality," to A+, "upper medium. " "The fall of the government during a confidence vote illustrates the fragmentation and growing polarization of domestic politics," the agency justified in a press release.

Last autumn, after the dissolution, it had already placed France " under negative outlook" . Its verdict risks influencing those of its counterparts Moody's and Standard & Poor's (S&P), expected on 24 October and 28 November.

If Fitch deplores the political situation, it is firstly because "instability weakens the capacity of the political system to implement a large-scale budgetary consolidation" . It must be said that after eight years of tax breaks , the State's finances are struggling: the debt reached 113.9% of GDP at the end of March and is expected, "without a clear horizon of stabilization" , to reach 121% in 2027 according to the agency.

The deficit is expected to reach 5.4% in 2025. The government's stated objective of limiting it to 4.6% next year seems out of reach, let alone the sacrosanct 3%.

While this situation was overly dramatized by the former Prime Minister during his speech to the National Assembly on September 8, it nonetheless has serious consequences. The downgrade of France's credit rating risks leading, in the long term, to an increase in the interest rates at which it borrows on international markets, where, for lack of an alternative solution, it largely finances itself.

So, how can we put an end to this spiraling public deficit? The Fitch agency has an idea. "The heavy tax burden and the high weight of structural spending make sustainable budgetary consolidation difficult," the agency emphasizes in its note . "With a compulsory tax rate of 45.6% of GDP (compared to an average of 40% in the EU), France has limited room to increase taxes further."

Before continuing in unison with the Macronists, the right and the far right: " It is also struggling to reduce its social spending, which amounts to 32% of GDP compared to 26% on average in the EU."

The scale of the difficulties could, however, lead to a re-examination of the question of the distribution of the effort, and with it, that of tax revenues. The growing debate around the Zucman tax , the control of aid to businesses or even discontent with growing inequalities, shows that it is becoming increasingly difficult to ignore this approach.