France Aims for a Responsible Budget by 2027 Amid Economic Challenges
The French government aims to create a "responsible" budget by 2027 amid worsening economic conditions.
Fitch Ratings has maintained France's sovereign credit rating at A+, but has downgraded its outlook from "stable" to "negative," citing slower growth and increased deficits.
Insee data revealed that France's GDP fell by 0.1% in the third quarter, following stagnation in the second and a 0.2% decline in the first.
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Fitch noted that "political fragmentation" and a "challenging social environment" complicate sustainable budget policy.
Finance Minister Roland Lescure emphasized the need to adopt a budget by the end of the year to reduce the deficit to 5%.
He warned that without a "recovery budget," the country could face serious economic issues.
The passage of the budget in parliament remains uncertain due to the lack of a majority and upcoming elections.
Fitch expects the government may utilize constitutional mechanisms to pass the budget, even without parliamentary support.
Economics professor Jérôme Mathis believes that a budget passed by ordinance could reduce short-term uncertainty but would not restore long-term confidence in budget policy.
