Eurozone countries are being warned of credit rating downgrades
4:40pm UK, Friday January 13, 2012
Standard Poor’s is about to downgrade France’s credit rating, sources including the French news agency AFP are reporting.
The euro fell on the currency markets amid the reports – the latest in the eurozone crisis -and stock markets across the world also declined.
Reuters has said other countries within the single market are also at risk of a downgrade by the prominent ratings agency.
Reuters columnist Peter Thal Larsen told Sky News: “If we’re talking about expectations then clearly France is what we would consider to be most vulnerable to a potential downgrade.”
Mr Larsen went on to explain that a French downgrade would be significant due to the country’s role as one of the AAA guarantors of the eurozone’s rescue fund, the EFSF, which would in turn also need to be downgraded.
This would make it more difficult to raise funds to bail out weaker countries, like Italy and Spain, if the need arose.
But he added that the move by SP would not be particularly surprising as the ratings agency had put several eurozone countries, including Germany, on notice a few months ago.
He said the downgrades would provide a “reality check” to the markets that the eurozone’s problems are nowhere close to being solved.