France’s Debt Warning After S&P Downgrade Raises Economic Concerns

France's sovereign credit rating was unexpectedly cut by S&P Global Ratings, dropping to A+ from AA- with a stable outlook. The MOVE reflects growing skepticism about the nation's fiscal trajectory amid sluggish deficit reduction plans. Budgetary uncertainties persist even after Paris submitted its 2025 draft budget, with health expenditures and energy subsidies continuing to strain public finances.

The downgrade leaves France with single-A ratings from two of the three major agencies after Fitch's similar action in September. S&P projects France's budget gap will only narrow gradually—from 5.4% of GDP in 2024 to 4.7% next year—without more aggressive cost controls or revenue measures. While the country retains strengths like a robust labor market and domestic savings base, analysts warn chronic deficit challenges could trigger further rating pressure.

Market participants are closely monitoring borrowing costs as the demotion coincides with heightened scrutiny of European sovereign debt. The development may amplify investor focus on alternative stores of value, though the report contained no direct cryptocurrency market implications.