Fitch credit downgrade clouds new French PM's budget fight

Fitch’s downgrade of France’s credit rating has cast a pall over newly installed Prime Minister Sebastien Lecornu as he begins talks to draft a budget, while unions prepare strikes over spending cuts and employers threaten protests against tax hikes.

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Citing political instability and rising debt, Fitch cut its rating on Sept 12 to A+ from AA-, giving France its lowest credit score on record just days after President Emmanuel Macron tapped Mr Lecornu to be his fifth prime minister in two years.

Although analysts said it was largely expected, the timing could hardly be worse.

Fitch’s downgrade fires the starting gun on a complex sprint to present a first draft of the 2026 budget to Parliament by Oct 7, with a possible extension until Oct 13.

Mr Lecornu faces a near-impossible task to make the cuts demanded by investors growing impatient with France’s spending, while also winning over three ideologically distinct parliamentary blocs with differing views on how to cut the budget.