Earlier this month, U.S. credit rating agency Fitch upheld its AA- rating for French debt, but shifted the outlook from "stable" to "negative." On 25 October,  Moody’s is set to deliver its assessment. If France’s budget plans falter, the country risks a credit rating downgrade, which would drive up borrowing costs and further inflate the national debt, which currently stands at a staggering €3.2 trillion.

On October 11, Fitch's decision to downgrade France's economic outlook to "negative" serves as a warning to Prime Minister Michel Barnier, who is struggling to push his 2025 budget through parliament. The credit agency's assessment signals a potential downgrade if the government fails to take swift action to improve public finances.

France's fiscal situation appears increasingly precarious. The deficit, now at €167 billion (5.5 percent of GDP), could  surpass 6 percent  by year’s end. With national debt projected to hit €3.5 trillion, or 114.7 percent of GDP, France is far beyond EU limits.

France braces for economic judgment amid political turmoil and record debt

EU rules require member states to keep budget deficits below 3 percent of GDP and debt under 60 percent of GDP.

Fitch predicts that the deficit will hover around 5.4% in both 2025 and 2026 due to ongoing political uncertainty and the challenges in implementing fiscal reforms. The agency believes the budget could pass before the year's end, but the government may need to make concessions to win support from opposition parties. 

All eyes are now on Moody's which will reveal its judgement on France's economy and credit-worthiness on 25 October. 

Meanwhile, Finance Minister Antoine Armand emphasised the government's commitment to improving the economy following Fitch's assessment, but will that be enough?

RFI spoke to Erik Norland, Chief Economist with the Chicago-based CMEGroup about the possible scenarios France's economic planners are facing.