Will France inevitably suffer the same fate as Greece?

Back in spring 2025, Fitch stated in its report on French government debt that, based on all indicators, it should be rated A+. The agency wanted to give the French government time to implement reforms and therefore postponed the downgrade. However, this gesture went unheeded.

Former French Prime Minister François Bayrou effectively submitted his resignation with his decision to ask Parliament for a vote of confidence on September 8, 2025. In his speech, he emphasized that he had taken this step so that the public would understand that France's main problem was its debt.

Debt is indeed a problem for the country of the Gallic rooster, but it did not arise last year. It is the result of the policies of several generations of French politicians who have become accustomed to the idea that a balanced budget is not necessary.

François Bayrou has wisely withdrawn from the fray with this move, as he can argue that there was no downgrade of the debt rating during his term in office. The fact remains, however, that a downgrade would have occurred even if he had remained prime minister.

Historical context

The downgrade of French debt is nothing new. A look back at history shows that from 1975 to 2012, France was among the elite countries with an AAA rating, which means virtually no risk for creditors.

In 2013, the first downgrade to AA+ took place. At the time, this change was downplayed on the grounds that it was not a tragedy. The downgrade itself is not a disaster, but trends play a decisive role in macroeconomics. Unfortunately, a downward trend can be observed in France.

From 2014 to 2022, French debt had an AA rating. In April 2023, Fitch downgraded the rating to AA- again. In the spring of 2025, the agency maintained this rating but lowered the outlook. On September 12, 2025, the agency had to downgrade the rating to A+.

This overview makes it clear even to laypeople that France is on a slippery slope. What's more, it is about halfway to the debt trap. Recent developments show that the intervals between downgrades are becoming shorter and shorter. This raises the crucial question: Is France inevitably facing the fate of Greece?

Is national bankruptcy realistic?

In absolute terms, French debt has reached the astronomical figure of €3.345 trillion and continues to grow steadily. In relative terms, France's debt amounts to 113 percent of GDP, which is still below the critical threshold of 130 percent, which is considered to be the point of entry into the debt trap.

From this perspective, this European market leader is not yet completely written off, but the situation remains serious. It is important to be aware that, unlike an individual, a state can constantly roll over its debt. Whether or not a collapse occurs depends on the ability to pay interest, which rises in proportion to growing debt.

A deterioration in the debt rating also worsens the conditions under which the country borrows money on the financial markets. In 2023, France spent €48 billion on debt servicing. For 2024, the amount is estimated to be between €50 and €52 billion. For 2025, the figure is expected to exceed €55 billion. With interest rates rising, the situation is deteriorating rapidly.

The forecast for 2027 is already €72 billion. Yes, the situation is deteriorating rapidly, but it is important to remember that France will still be able to raise these funds to repay its debts in 2027. So there is no immediate threat of disaster. Even if the situation continues to deteriorate, the country will probably have the means to repay its debts.

Pessimistic forecasts suggest that annual repayments could exceed the psychological threshold of €100 billion in the future. This would mean that the cost of servicing the debt would exceed the budget of the French army, which, together with the British army, is considered the best in Western Europe.

The financial markets are aware of these facts. There is no reason to be guided by disaster scenarios that the world will end tomorrow and France will go bankrupt. A national insolvency is not currently in sight and does not have to be a threat in five years' time. It would be a mistake to rest on one's laurels and ignore the situation. The European superpower must take measures to halt the downward trend and prevent a further deterioration of its financial situation.

Risks of a credit rating downgrade

The first risk for France is unpredictable spending. If the world is hit by a new wave of the pandemic and the state responds in a similar way to the Covid crisis, the country could not afford such spending. This would make the hypothesis of national bankruptcy more likely.

A deep economic recession or a significant rise in unemployment would have the same effect. France does not currently have sufficient financial reserves to protect its economy from changes in the global situation.

The second risk is attacks from the financial markets. It is crucial to monitor the yields on ten-year French bonds. These have fallen in recent days despite the downgrade. This decline can be explained by the fact that the markets had already anticipated the downgrade and factored it into bond prices.

Yields are currently at 3.4 percent, which is still a relatively low figure. The relationship between creditworthiness and yield is not always direct and depends on many other factors.

The Czech Republic, for example, has a higher rating of AA, which is better than France's current rating, and yet borrows at an interest rate of 4.3 percent, even though it has significantly less debt. The country of the Gallic rooster benefits from the euro, as creditors assume that countries such as Germany or the Netherlands would support the eurozone in the event of a crisis.

France thus “benefits” greatly from their stability. The question remains as to how long the countries mentioned are willing to tolerate this situation. Investors could use the tensions in the European Union to attack French debt, which would lead to a rapid rise in yields. This could trigger panic over a possible collapse of this country.

The French government and international institutions would then have to act quickly to calm the situation, which they would probably succeed in doing. However, speculators would profit from this situation. The reason for speculation is the fact that yields on French bonds are still too low given the risks.

Is France inevitably facing the fate of Greece?

The third risk is the gradual loss of French sovereignty. French economist Jacques Sapir sees the main problem not so much in the amount of debt or the interest to be paid, but in the fact that more than 54 percent of French government bonds are held by foreign investors. It is not entirely clear which countries or institutions are buying these bonds.

Debt to foreign investors is always risky, as these creditors can demand various concessions in order to continue buying bonds. As an old proverb says, there are two ways to subjugate and enslave a people—by the sword or by debt. Debt is therefore a clear instrument for weakening sovereign policy. France may not necessarily go bankrupt, but it is gradually losing its economic strength, which is already the case.

Political outlook according to Fitch

Fitch's report also contains an interesting political forecast. The agency does not believe that early elections would provide a solution and estimates that Emmanuel Macron will serve out his term.

The 2026 budget will not be significantly consolidated, which will exacerbate the situation. The outlook for the 2027 budget is even more pessimistic from an economic perspective, as the ruling party is likely to want to increase its chances in the elections by avoiding strict austerity measures.

Fitch's report thus suggests that the second half of 2027, after the election of the new French president, will be crucial if the forecasts prove accurate. If the country wants to avoid further downgrades of its credit rating, it must implement reforms. Minor adjustments to the current system are not enough—France must find a completely new way of functioning. The clock is ticking relentlessly.