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This week
🇮🇸Iceland reject EU Accession continuation
🚓Sébastien Delogu arrested for police altercation
🇸🇪France chases fighter collaboration with Sweden
💳Fitch keeps France’s credit rating at A+
📉France tiptoes to the edge of recession
🇮🇸Iceland reject EU Accession continuation
So, a quick note before we get into the first Dispatch back from the summer (hi, by the way):
It appears that Icelanders have voted to reject the continuation of EU Accession negotiations, with the numbers as of 11am CET being 47.46% in favour of continuing and 52.52% against.
🚓Sébastien Delogu arrested for police altercation
So, for the first story back from an overly hot, relaxing summer break: this past Monday, far-left deputy for Marseille, Sébastien Delogu (LFI), was arrested after an altercation with police officers in his building.
According to reports, three police officers had attempted to enter his building in search of an individual who was believed to have stolen a watch. Delogu was returning home when they entered, and he refused to let them in after they refused to identify themselves.
Despite this, a few moments later they crossed paths again on the landing of the deputy's apartment, where an argument broke out while the individuals involved were apparently recording each other.
According to the deputy, the police officers insulted him repeatedly, calling him “shit”, saying he ‘stank of shit’, and apparently physically threatening him by pressing his fist into his chest.
On the other hand, the police officers claim that Delogu physically “opposed” them and physically prevented their entry into the building, calling them a “bunch of losers” and calling one an “asshole”.
And in the meantime, the man believed to have stolen a watch was arrested in the apartment opposite Delogu’s and has since been released following a quick judgment.
At the end of all this, Delogu was arrested by the police, held for eight hours on Thursday, and then summoned for contempt following the altercation. The far-left deputy was also criticised for alerting the individual the police were seeking that they were being sought out.
🇸🇪France chases fighter collaboration with Sweden
Moving on to a bigger geopolitical story: Emmanuel Macron will be touching down in Stockholm on Monday for a state visit, where concrete discussions focusing on frigates and a new defence framework agreement will take place.
However, one major line was casually dropped this week by an Elysée official briefing reporters ahead of the trip, a move that could move markets and probably made a certain Bundeskanzler sweat over in Berlin :
France is open to building its next fighter jet with Sweden.
“We’re both looking for aircraft that are fairly similar, fairly small,” the official said, engaging in some political courtship as France attempts to find new partners following the FCAS debacle. When pressed on whether concrete cooperation was on the table, the same official added that France has “aircraft engine production capacity that Sweden doesn’t have,” gesturing at Safran’s know-how and French savoir-faire in fighter tech which Paris can offer.
Now, it’s important to note that nothing has been formally agreed, yet this is the clearest signal yet that Paris sees Stockholm as a live option to replace the failed FCAS project, and not just another friendly Nordic neighbour with a defence industry.
Many of you dear readers of mine will recognise the backdrop of this situation: this is the same fault line I traced when FCAS collapsed this spring.
The Future Combat Air System, the c.€100 billion Franco-German-Spanish project meant to replace the Rafale and Eurofighter by 2040, didn’t die of strategic disagreement so much as it was strangled by an industrial turf war and political gerrymandering in Germany.
Dassault, as the prime contractor on the jet itself, wanted to lead as per the signed agreement. Germany and Airbus, despite their lack of expertise in Fighter jets, wanted primacy and began manoeuvres to take over, and things reached a point where Dassault’s Éric Trappier bluntly stated in March that “Airbus no longer wants to work with Dassault.”
Underneath the corporate squabble sat a real capability gap: Paris wanted a carrier-capable, nuclear-armed aircraft; Berlin saw little use for either feature. A last attempt by Airbus CEO Guillaume Faury to split the difference — two separate aircraft variants — only hardened the divide. Germany pulled the plug in June. The one piece surviving the wreckage is the “combat cloud,” the sensor-and-drone networking layer both sides agreed was worth finishing regardless.
You can read the in-depth breakdown covering every facet of the FCAS history here:
The Death of FCAS: an Anatomy of Europe's €100 Billion Defence Scandal
The story of how the Franco-German fighter was killed, how Germany had its replacement ready beforehand, and what it tells us about Europe's sovereignty drive.
Now many of you may be asking why France is trying to collaborate with Sweden, a country that many don’t view as an important defence actor, but those of you working in the sector know that Sweden checks a box almost nobody else in Europe can: it’s one of only two European countries, alongside France, that can independently design, develop and produce a fighter jet from scratch, as Swedish Defence Minister Pål Jonson pointedly noted this summer.
Saab’s Gripen E is a genuine fourth-generation success story, has proven itself a reliable fighter, and, despite its dependence on American technology, is viewed as a strong European product.
And with the push for European strategic autonomy and the need for greater independence in the European military domain, what better partnership could there be than two leading producers of Fighter jets, France and Sweden, collaborating to create a next-generation fighter jet combining French savoir-faire and Safran’s engine technology with Saab’s reliability?
More importantly, Saab has already been running feasibility studies since 2024 on a Gripen successor, backed by a roughly SEK 2.6 billion government contract that runs through 2027, and is due to fly an unmanned demonstrator that year as part of the process.
Stockholm, naturally, is explicitly keeping its options open: does it go alone? Does it join a foreign program like GCAP? Or does it buy an existing platform that would save it a lot of time, effort and money? A decision is expected by September 2027, with many member states attempting to court Sweden to lock in a long-term collaboration with Saab that would effectively secure Europe’s only other sovereign fighter-building capability, next to France.
And Paris isn’t the only one knocking at the door: Germany’s Airbus approached Saab about joining its “Team Gen 6” effort back in June, weeks after FCAS was intentionally killed, and on July 10, at the NATO summit in Ankara, Jonson and German counterpart Boris Pistorius signed a letter of intent covering air defense and next-generation fighter cooperation, with an eye toward unmanned “loyal wingman” systems as well as a crewed jet.
It’s worth being precise about scale here, because the fighter jet talk risks overshadowing the visit’s real, signed deliverables. Monday’s program centres on a signing ceremony for Sweden’s purchase of four French-built frigates, as well as a defence framework agreement between Jonson and French Armed Forces Minister Catherine Vautrin covering “operational matters, defence capabilities and industrial development”.
All of which are part of a bilateral strategic partnership that predates the FCAS collapse and have been a pillar of Emmanuel Macron’s Foreign Policy doctrine of European Strategic Autonomy
The fighter jet comments were a briefing aside, not an agenda item, and the French official was careful to say so: Dassault and Saab remain, in that official’s words, “two competitors with fairly similar approaches who respect one another,” with “cooperation in the past” but nothing formal now.
Expect to hear more about this in the coming weeks.
💳Fitch keeps France’s credit rating at A+
So, moving back to the metropole: Fitch confirmed on Friday that it’s keeping France’s sovereign rating at A+, with a stable outlook. No downgrade, no drama, for now, just good news.
For those of you wondering if this was a surprise: this was more or less the expected outcome. Natixis CIB’s Hadrien Camatte had already called the status quo “the most probable scenario” going into the announcement, while flagging that a shift to a negative outlook “cannot be ruled out.”
Fitch had only reaffirmed the rating in March and had already downgraded it once in September 2025, so cutting it again so soon would have been a genuinely aggressive and damaging move.
Fitch kept its rating steady even as it revised its own deficit forecasts upward: 5.2% of GDP for 2026, 5.5% for 2027, and 5.2% for 2028, up from the 4.9% it modelled back in March. The agency pointed to weaker growth, higher interest costs, and, pointedly, extra defence spending commitments as the reasons for the jump. The ongoing political uncertainty, with presidential elections on the horizon and the potential for a major shift in economic politics, will also play a role in this.
Then there’s the line that will actually sting in Matignon: Fitch flagged “persistent political fragmentation” (‘a hung Parliament, again’ en bon français) as a “major weakness” that “reduces the authorities’ capacity to implement a durable budgetary adjustment.” Put simply, rating agencies don’t love minority governments, and France has had one for over two years running.
Markets had already been pricing in some of this nervousness before Friday’s verdict even landed. French 10-year borrowing costs (the OAT) had been above 4% since late July, a level last seen during the 2009 financial crisis, and the spread over German Bunds had widened to 82 basis points by the day of the announcement, more than double what it was in 2017.
That’s the bond market’s own verdict on “political fragmentation,” and it explains why Fitch’s line about higher interest payments has real teeth: France is now paying a real, growing premium just to keep rolling over its debt.
Economy Minister Roland Lescure (REN) attempted to reassure the country, saying that the government “remains fully mobilised to contain the public deficit and debt, within a responsible and balanced framework.” Whether that survives contact with reality is the real question: Prime Minister Sébastien Lecornu is reportedly targeting a 2027 deficit of around 4.9% of GDP, effectively burying the previous government’s pledge to get under 3% by 2029, while ruling out tax rises and letting spending climb 2.4%, largely on defence and debt-interest costs.
Debt itself sat at 117.5% of GDP at the end of March, per INSEE, and it’s fast becoming an actual campaign issue rather than a technocratic footnote: Jean-Luc Mélenchon’s proposal to simply cancel a large chunk of the debt, held via the Banque de France, drew fire from across the spectrum, with economists warning it would breach EU treaties, tank investor confidence and edge France toward the exit door on the euro.
And there could be more bad news on the horizon.
Two more verdicts are expected this coming autumn: Moody’s on October 23, and S&P (which already cut France to A+ last autumn) on November 27. If either one moves, it’ll dominate the political discourse and be used as a weapon by the far-right Le Pen and far-left Jean-Luc Mélenchon in the upcoming elections.
If neither does, expect the political class to quietly exhale and go straight back to arguing over the budget anyway, because it is election time, after all
📉France tiptoes to the edge of recession
To wrap up the week: on the same day Fitch was grading France’s homework, INSEE quietly handed the government some bad news: French GDP growth for the second quarter has been revised down to a flat 0.0%, from an initial estimate of 0.2%. Q1 was revised down too, to a 0.2% contraction rather than the 0.1% first reported.
Officially, that’s not technically a recession. The standard definition needs two consecutive quarters of contraction, and flat isn’t technically negative. However, France has gotten here the hard way: a slightly worse quarter between April and June would have tipped the economy over the line and pushed France into the red zone, and over the first half of the year as a whole, growth has come in at just 0.3%.
INSEE pinned the downward revision on a worse-than-expected agricultural season and stickier-than-forecast prices in market services, transport in particular, which only became clear after its first estimate was released.
The details underneath aren’t much prettier: household purchasing power fell 0.6% per consumption unit (worse than the 0.2% drop in Q1), and the savings rate slid from 17.9% to 17.2%, as households spent a bit more (+0.3%) while earning less in real terms.
The read-through for the rest of the year isn’t reassuring either: with inflation running at 2.4% and no single sector actually driving growth, even a modest wobble in Q3 or Q4 would be enough to tip full-year 2026 into outright negative territory rather than just flirting with the technical-recession threshold.
The one genuine bright spot, that 2.9% export rebound, is largely due to a jump in Airbus deliveries, which is a nice reminder that French growth right now leans heavily on aerospace exports, just as defence and fighter-jet diplomacy (hello, Sweden) is dominating the headlines elsewhere in this dispatch.
None of this is good news for Sébastien Lecornu’s government, whose team had already cut its 2026 growth forecast twice this year, from 1% to 0.9% in April, then to 0.7% in July, and even that lower bar now looks generous against a first half that delivered less than half the growth it was pencilling in.
That target now looks nearly unreachable, which undercuts the “responsible and balanced” framing coming out of the Economy Ministry this same week and previews the kind of arguments we can expect as the Presidential election heats up.
And the timing could hardly be worse: this lands the same day Fitch revised its own deficit forecasts upward, citing weaker growth as one of the exact reasons why, and about a month before Lecornu has to present the last budget of the presidential term, one he’s already framing around a 4.9% deficit target for 2027 rather than any serious consolidation.
Expect growth numbers to be the recurring backdrop noise to every budget fight this autumn, right up to the presidential campaign proper. And expect every candidate, from Lecornu’s own camp to Mélenchon on the left and Bardella on the right, to spend the next eight months arguing about whose fault a “quasiment à l’arrêt” economy actually is.
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