France has been downgraded by S&P Global in a blow to Emmanuel Macron’s fiscal credibility.
The credit rating agency lowered France’s long-term issuer rating from AA to AA-, citing larger-than-expected deficits and rising debt.
S&P said it now expects France’s government debt as a share of gross domestic product will “continuously increase” to 112pc by 2027, up from 109pc in 2023, while the country’s budget deficit in 2023 was “significantly higher” than previously forecast at 5.5pc.
The agency also said that political fragmentation “adds to the uncertainty” around France’s ability to implement reforms that could increase economic growth and address imbalances in the budget.
Mr Macron no longer holds a parliamentary majority in France, making it more difficult for him to pass legislation.
French Finance Minister Bruno Le Maire told the paper Le Parisien the downgrade was the consequence of decisions taken to “save” the French economy during the pandemic and the inflation crisis.
“There will be no impact on the daily lives of the French,” he added.
The downgrade is a blow to Mr Macron, once nicknamed the “Mozart of finance”, and his strategy of cutting taxes, reducing the public sector and boosting investment.
It comes ahead of the European elections on June 9 which Mr Macron’s centrist party is expected to lose, with Marine Le Pen’s far-right National Rally party currently ahead in the polls.
The government was bracing for a downgrade after it revealed in January that its budget deficit was bigger than expected last year at 5.5pc compared to a previous forecast of 4.9pc.