Rating agency Standard & Poor's affirmed France's long-term credit rating at AA, saying that the government is making gradual progress on the economic and fiscal fronts.

The agency also affirmed the stable outlook on the rating. S&P stripped France's top notch AAA rating in January 2012. The rating was lowered from AA+ to the current level in November that year.

"The French government has shifted toward policies to reduce labor costs and corporate taxation in order to improve the economy's competitiveness," S&P said in a statement.

The firm expects the French government to gradually decrease its budget deficit to less than 3 percent of GDP by 2017, helped by expenditure savings. However, government debt levels as a share of GDP is expected to remain high and continue to grow until 2017.

"The stable outlook reflects our view that risks to France's creditworthiness are balanced and that there is less than a one-in-three probability of raising or lowering the ratings over the next two years," S&P said.

This week, French President Francois Hollande unveiled a plan to reducer government spending. The plan projects the budget deficit to shrink to 3.8 percent this year and reach the Maastricht treaty target of 3 percent next year.

The government has forecast 1 percent growth for this year and 1.7 percent expansion for 2015.

RTTNews