News and Events

Eurozone crisis deepens

13/01/2012

The European debt crisis was yesterday plunged into yet more uncertainty as Standard & Poor's downgraded the credit ratings of no fewer than nine Eurozone countries.

Among them were the major economies of France and Italy, with the former having its top AAA rating cut by one notch and Italy one of four countries whose rating was cut by two notches.

Spain, Portugal and Cyprus were the other three, with the latter two seeing their ratings fall to "junk" status. Austria, Malta, Slovakia and Slovenia also saw their credit ratings downgraded.

The news came as a major blow to the Eurozone region on the same day that urgent talks over a second Greek bailout package stalled, though the fact Germany retained its top rating following two years of impressive economic growth did at least provide some relief.

The ratings agency blamed the downward revisions on the failure of the Eurozone leaders to deal with the crisis effectively: "Today's rating actions are primarily driven by our assessment that the policy initiatives that have been taken by European policymakers in recent weeks may be insufficient to fully address ongoing systemic stresses in the Eurozone," said S&P in its statement.

But Olli Rehn, the European Union's economic affairs commissioner, argued the decision was "inconsistent" whilst "decisive action" was being undertaken.