On 8 September 2025 the National Assembly brought down Prime Minister François Bayrou, and on the 12th Fitch cut France’s rating to A+. What it means for French debt and the markets.
French Prime Minister François Bayrou lost the confidence vote he himself had called in the National Assembly on 8 September 2025 to defend his savings plan: 364 deputies voted against and 194 in favour. Bayrou resigned the next day and President Emmanuel Macron appointed Sébastien Lecornu, until then minister for the armed forces, as prime minister, the fifth head of government since 2022.
What we know
Bayrou’s plan aimed to save some €44 billion in the 2026 budget, with measures such as freezing spending and benefits and scrapping two public holidays. The left-wing opposition and the far right rejected it. France ended 2024 with a public deficit of 5.8% of GDP and debt above 113% of GDP.
On 12 September Fitch downgraded French debt from AA– to A+, with a stable outlook. It cited political instability, which makes it harder to cut the deficit, and debt that will keep rising in the coming years. It was the first of the three big agencies to place France in the A category.
The market reaction
France’s risk premium, the gap between what France and Germany pay on ten-year debt, hovered around 80 basis points, its highest since the political crisis of late 2024, and the yield on French bonds briefly matched Italy’s, something unthinkable only a few years ago.
A lower rating can lead some funds to cut their holdings and, over time, raises the state’s borrowing costs. But French debt keeps a high rating and a very deep market, and the moves were orderly.
Why it matters here
France is the leading destination for Spanish exports. A France with less fiscal room and a weak government weighs on euro-area growth and on the credibility of European fiscal rules. For investors, the French risk premium has become an indicator to watch, as the Italian and Spanish ones were at other times.
Anyone holding European bond funds or French bonds should know how much exposure they have and at what maturities. Ask your adviser how it may affect you.
Debt is measured in figures, but its price is set by politics.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
