France’s economy is rated 13th out of the 17 eurozone countries, far behind other AAA-rated countries such as Germany, Finland or the Netherlands. France's economic prospects are so mediocre, it shouldn’t be considered a leading economy, says the report's Euro Plus Barometer.
France was rated between Spain and Italy, two countries struggling to finance their debt and reassure investors.
On Tuesday, the gap between German and French 10-year borrowing rates widened to a record 172.6 basis points, a sign that investors are wary of buying French bonds. This means France has to pay twice as much as Germany to borrow.
Last week, the ratings agency Standard & Poors issued a statement saying it was stripping France of its AAA status. It later backtracked, denied the downgrade and said it was an error on its website.
The Lisbon Council report concludes that France should usher in crucial reforms to keep its AAA rating, ideally before the presidential elections in April.