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Thursday, Feb 26, 2026
Outside the box.
Fitch Ratings Chief Highlights Concerns Over U.S., China, and European Fiscal Policies
Fitch's sovereign ratings head addresses challenges related to U.S. debt, global tariffs, and fiscal strains in France and the UK.
Fitch Ratings' head of sovereign ratings, James Longsdon, has outlined the agency's key focus areas, including the potential fiscal impact of Donald Trump’s second term as U.S. president, China’s economic outlook, and fiscal challenges in France and the United Kingdom.
Speaking in his first interview since his appointment last year, Longsdon stated that Fitch expects to have a clearer understanding of U.S. fiscal policy by its next ratings review in August.
Fitch downgraded the United States’ credit rating in August 2023, reducing it from AAA to AA+ with a stable outlook.
The downgrade followed rising concerns about the country's $36 trillion debt, which is growing by approximately $2 trillion annually.
Longsdon noted that expectations of aggressive tax cuts and heightened trade tensions under Trump’s administration are areas of concern, adding that Fitch will evaluate whether U.S. tariff policies will be gradual or more disruptive.
China’s credit rating remains under scrutiny, with its current outlook already flagged for a potential downgrade.
The agency is monitoring the effects of U.S. tariffs on Chinese goods, currently assumed to reach 60% on dutiable items.
Fitch is also assessing domestic factors, including early signs of recovery in China’s property market, but further data is needed to gauge the overall fiscal impact.
France’s AA- rating, which was assigned a negative outlook in October, is under pressure due to rising debt levels, expected to reach 118.5% of GDP. The French government recently revised its spending cut target to thirty-two billion euros, down from forty billion, to secure parliamentary support.
Longsdon mentioned that Fitch is closely monitoring political developments, including the potential for new elections, though no timeline for a ratings decision has been set.
The UK, rated AA- with a stable outlook, faces growing uncertainty regarding its ability to meet fiscal targets.
Fitch is scheduled to review the UK’s rating on February 28, focusing on whether the government will miss its public finance goals and how it plans to address any shortfalls.
Longsdon highlighted the importance of assessing the government’s commitment to its fiscal rules.
Fitch has built a reputation for being proactive in its ratings decisions, and Longsdon emphasized the importance of maintaining that approach.
He noted that making early and accurate calls is critical for Fitch's credibility as one of the 'big three' credit rating agencies.
Speaking in his first interview since his appointment last year, Longsdon stated that Fitch expects to have a clearer understanding of U.S. fiscal policy by its next ratings review in August.
Fitch downgraded the United States’ credit rating in August 2023, reducing it from AAA to AA+ with a stable outlook.
The downgrade followed rising concerns about the country's $36 trillion debt, which is growing by approximately $2 trillion annually.
Longsdon noted that expectations of aggressive tax cuts and heightened trade tensions under Trump’s administration are areas of concern, adding that Fitch will evaluate whether U.S. tariff policies will be gradual or more disruptive.
China’s credit rating remains under scrutiny, with its current outlook already flagged for a potential downgrade.
The agency is monitoring the effects of U.S. tariffs on Chinese goods, currently assumed to reach 60% on dutiable items.
Fitch is also assessing domestic factors, including early signs of recovery in China’s property market, but further data is needed to gauge the overall fiscal impact.
France’s AA- rating, which was assigned a negative outlook in October, is under pressure due to rising debt levels, expected to reach 118.5% of GDP. The French government recently revised its spending cut target to thirty-two billion euros, down from forty billion, to secure parliamentary support.
Longsdon mentioned that Fitch is closely monitoring political developments, including the potential for new elections, though no timeline for a ratings decision has been set.
The UK, rated AA- with a stable outlook, faces growing uncertainty regarding its ability to meet fiscal targets.
Fitch is scheduled to review the UK’s rating on February 28, focusing on whether the government will miss its public finance goals and how it plans to address any shortfalls.
Longsdon highlighted the importance of assessing the government’s commitment to its fiscal rules.
Fitch has built a reputation for being proactive in its ratings decisions, and Longsdon emphasized the importance of maintaining that approach.
He noted that making early and accurate calls is critical for Fitch's credibility as one of the 'big three' credit rating agencies.
