Debt: American rating agency S&P to issue France's first rating under the Bayrou government

The American rating agency S&P will say on Friday whether the state of French public finances is such that it must lower France's sovereign rating, the first test in this area for François Bayrou's government . This is indeed the first time that France will be assessed since the Prime Minister, in a political landscape totally fragmented since the dissolution of the National Assembly decided on June 9 by Emmanuel Macron, succeeded in having the State budget and the Social Security budget adopted by 49.3 this month, without being censured like his predecessor Michel Barnier.

Currently, S&P rates France AA- with a "stable outlook" , meaning that the rating should not be downgraded in the short term. Moody's rates it exactly the same (Aa3 with a stable outlook) and Fitch rates it AA- too, but with a negative outlook. With these ratings, France still has a "high quality" credit, the equivalent of a 17/20. A lowered rating would classify it as "upper average quality" . With this rating, investors would continue to buy its debt, notes Stéphane Colliac, economist at BNP Paribas , especially since the French economy appears diversified and its situation is not currently causing the markets to panic.

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Eric Dor, director of economic studies at the IESEG School of Management, does not rule out the possibility that S&P "remains benevolent" by not touching the rating. But "lowering the outlook to negative would be justified," he believes. The economist observes that, despite the adoption of the budget, there has been little progress in French public finances since S&P's last rating on November 29. "The assessment should not be brilliant" on the public deficit that the agency monitors, he observes: "after all the great dramatized theater around the budget," we are only preparing to go from a deficit of 6 or 6.1% of GDP in 2024 to a deficit of 5.4% this year, a development that represents "almost nothing," according to him.

In addition, budgetary improvements rely heavily on tax increases, "half of which are presented as temporary" - such as the corporate tax surcharge for companies with a turnover of more than one billion euros, announced for a period of one year: "so we are postponing the structural effort to the following years" , notes Éric Dor. In terms of growth, S&P was counting on 1% growth in 2025 at the end of November, and the government is expecting 0.9%, a high but "achievable" estimate according to Stéphane Colliac.

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He believes that the budgetary choices of the Bayrou government, more focused on state finances than those of Michel Barnier, give him "more control" than if they focused more on controlling social spending or that of local authorities, the balance of all these accounts constituting the public deficit. What particularly worries Stéphane Colliac is the debt, which reached 3,303 billion euros at the end of the 3rd quarter, and especially the interest charge that it generates, which according to BNP Paribas calculations will soon reach 3% of GDP.

However, the government has committed to Brussels to reduce the public deficit to 3% of GDP by 2029. If the interest burden soars, the public accounts will have to be balanced excluding the debt burden, observes Stéphane Colliac. Which is "complicated" . Will S&P choose to consider the glass half full? A minister confides that the decision is awaited with a little anxiety, and assures that in any case, Éric Lombard, the Minister of the Economy, has asked all his colleagues to constantly check that the evolution of their budget does not compromise the objective of a public deficit contained at 5.4% of GDP at the end of the year.