Fitch Downgrades France's Credit Rating Amid High Debt and Deficits
On September 12, credit rating agency Fitch downgraded France's sovereign debt rating from AA to A+. This move reflects France's ongoing struggle with high debt and deficits, making each citizen an involuntary shareholder in a debt of nearly 50,000 euros per capita.
The downgrade places France's rating above countries like Iceland, Spain, or Italy, but below financially stable nations such as China, Israel, or Saudi Arabia. France's debt stands at over 3,300 billion euros, equivalent to 114% of its annual GDP, and is primarily financed through financial markets.
The French government has been grappling with this issue, planning to reduce public deficits through austerity measures. This includes savings of about 45 billion euros and cutting two public holidays, aiming to lower the state deficit from nearly 6% of GDP. However, political instability and opposition have hindered these efforts, leading to government resignations and potential delays in the 2025 budget. Meanwhile, the Socialist Party proposes a more balanced approach, combining moderate savings with increased tax revenues, such as reviving wealth taxes on fortunes over 100 million euros, to reduce the deficit to around 5% by 2026 and 3% by 2032.
France's debt and deficit issues have been persistent since 2012, with the latest downgrade serving as a reminder of the need for effective solutions. The government's plans to tackle this, along with alternative proposals from political parties, will shape France's economic future.
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