PARIS, June 1 ― Ratings agency S&P yesterday downgraded France's credit score for the first time since 2013, citing a deterioration in the country's budgetary position.

S&P justified its decision to lower its rating for the EU's second-largest economy to "AA-” from "AA” by saying the budget deficit was forecast to remain above three percent of GDP in 2027.

At 5.5 per cent of GDP, the French budget deficit in 2023 was "significantly higher than we previously forecast”, it said.

France's general government debt will increase to about 112 per cent of GDP by 2027 from around 109 per cent in 2023, "contrary to our previous expectations”, the US-based agency added.

Economy Minister Bruno Le Maire reaffirmed the government's goal of slashing the public deficit to below three per cent of GDP in 2027, telling newspaper Le Parisien that the main reason for the downgrade was because "we saved the French economy”.

A credit downgrade risks putting off investors and making it more difficult to pay off debt. Earlier this year, influential ratings agencies Moody's and Fitch spared handing France a lower note.

S&P also maintained its "stable” outlook for France yesterday on "expectations that real economic growth will accelerate and support the government's budgetary consolidation”, albeit not enough to bring down its high debt-to-GDP ratio. ― AFP