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New French PM faces same fiscal headaches, rating agency S&P warns
Published by Global Banking & Finance Review®
Posted on September 10, 2025
2 min readLast updated: January 22, 2026
Global Banking & Finance Review®
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Published by Global Banking & Finance Review®
Posted on September 10, 2025
2 min readLast updated: January 22, 2026
France's new PM Lecornu faces fiscal challenges with S&P warning of a potential downgrade due to high debt and budget deficits.
LONDON (Reuters) -France's fiscal problems and shaky political set up are unlikely to be solved by the appointment of new Prime Minister Sebastien Lecornu, credit rating firm S&P Global said on Wednesday.
S&P and its counterpart Fitch, which is due to review its French rating on Friday, have 'negative outlooks' on their AA- scores due to heavy government spending and Paris' debt-to-GDP ratio of over 110%.
S&P's next review is on November 28 and it has long warned of a potential downgrade - that could prompt a new round of bond selling - if the government fails to reduce its persistently large budget deficits, forecast to be 5.6% this year.
"Like his predecessor who resigned following a no-confidence vote on his plan to reduce the general government deficit, Lecornu begins his new role without the backing of a majority of seats in the National Assembly," S&P said in a note on this week's developments.
It added that Lecornu might attempt to pass the country's budget without submitting it to a parliamentary vote.
"In our view, such a decision implies that political uncertainty will continue throughout the run-up to the April 2027 presidential elections," S&P said.
Lecornu's immediate challenge will be how to steer a streamlined 2026 budget through parliament, which is split into three distinct ideological blocs. Parties broadly agree on the need to slash France's deficit, but not on how to do it.
(Reporting by Marc Jones;Editing by Elaine Hardcastle)
The new Prime Minister, Sebastien Lecornu, faces significant fiscal challenges including heavy government spending and a high debt-to-GDP ratio, which have led to negative outlooks from rating agencies like S&P and Fitch.
S&P has warned of a potential downgrade of France's credit rating if the government fails to reduce its large budget deficit, with its next review scheduled for November 28.
Lecornu begins his role without a majority in parliament, which may lead him to attempt passing the budget without a parliamentary vote, indicating ongoing political uncertainty leading up to the April 2027 presidential elections.
The 2026 budget is crucial as Lecornu must navigate it through a parliament divided into three ideological blocs, with a general consensus on the need to reduce France's budget deficit.
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