2025.09.1506:42:02UTC+00France’s Bond Yields Climb After Fitch Downgrade

The yield on France's 10-year government bonds has risen to over 3.5%, its highest level since early September, following Fitch Ratings' decision to downgrade the nation's sovereign credit rating from AA- to A+, marking the lowest rating on record for France. The rating agency attributed its decision to political instability and growing national debt, highlighting fiscal challenges coinciding with President Emmanuel Macron's appointment of his fifth prime minister in just two years. This downgrade came in the wake of former Prime Minister François Bayrou's resignation last week, after his failure to secure backing for a plan of tax increases and spending reductions. Bayrou had also proposed an unpopular initiative to reduce costs by eliminating two public holidays, which was swiftly dismissed by his successor. The new Prime Minister, Sébastien Lecornu, now faces the formidable task of guiding budget negotiations under intense public and political scrutiny. He is required to present a draft budget for 2026 to parliament by October 7, with a possible extension to October 13. France’s budget deficit, currently the largest in the eurozone, is forecasted to reach 5.4% of GDP this year.