Fitch affirms Frances A debt rating amid rising fiscal pressures and investor concerns

Fitch Ratings maintained France’s sovereign debt rating at A+ with a stable outlook on Friday, citing the country’s “large and diversified economy,” “robust banking sector,” and “diversified investor base,” despite rising public debt and fiscal pressures . The agency noted challenges including “high and increasing debt levels,” a political and social environment complicating fiscal consolidation, and weak growth potential.

The decision comes as France prepares to present its final budget before the 2027 presidential election, with debt at the center of political debate . Meanwhile, the Financial Times reported that investors now view France as a greater concern than Italy, a shift highlighted by Italian conservative newspapers such as *Il Giornale* and *Libero Quotidiano*, which ran headlines celebrating Italy’s improved standing . The Financial Times analysis pointed to the yield spread between French and Italian 10-year government bonds, where Italian debt had historically demanded higher yields due to perceived risk.

In Japan, concerns over sustainability of its debt—projected at 204% of GDP by the IMF—have grown as borrowing costs rise. A 30-year Japanese government bond now carries a 4.04% yield, double the rate of two years ago, while 10-year bond yields reached 2.87% this week, according to *Die Presse* . The country’s low household savings and potential reliance on foreign investors for new debt could increase financing costs, raising questions about the feasibility of Prime Minister Sanae Takaichi’s growth program.

France also advanced a new environmental policy this week, imposing fees on ultra-fast fashion items under a law passed in early July. Starting this year, consumers pay 50 cents for underwear and socks, €2 for T-shirts, and €9 for jeans meeting specific criteria, with rates set to rise by 2030 to €2 for underwear and €19.50 for jackets . The funds will support sustainable fashion initiatives, while the law also bans advertising for disposable clothing and requires retailers to promote repair and reuse. French Environment Secretary Mathieu Lefevre stated via X that the measure targets business models reliant on rapid disposal of clothing, adding that the environmental and economic harms of ultra-fast fashion are well-documented. EU tariffs on small packages from China have already reduced such shipments to France by 30-40%, according to French customs data.