Volkswacht Bodensee - Fitch downgrades French debt to AA-, outlook stable

"Public finances, and in particular the high level of government debt, are a rating weakness," Fitch said in a commentary on its rating action which said the country's outlook was stable.

"Political deadlock and (sometimes violent) social movements pose a risk to (President Emmanuel) Macron's reform agenda and could create pressures for a more expansionary fiscal policy or a reversal of previous reforms."

The commentary warned that "materially lower economic growth prospects and weakened competitiveness" could contribute to a further downgrade, as could "a large and persistent increase in government indebtedness".

Macron has sought to push through unpopular reforms to France's retirement system, including increasing the retirement age to 64 from 62, insisting the changes are necessary for the pension system to be financially viable.

With popularity plunging after the signing of the pension reform which sparked nationwide protests, Macron has set a 100-day target to relaunch his second term.

J.Bergmann--BTB