EU loses its credit rating due to recession and Poor Economic conditions
“I regret the inconsistent decision…by Standard & Poor’s concerning the rating of several euro area member states at a time when the euro area is taking decisive action in all fronts of its crisis response,” Rehn said in a statement on Friday.
On Friday, Standard & Poor’s downgraded the credit ratings of France and Austria, among other EU member states, prompting France’s President Nicolas Sarkozy to hold crisis talks with key ministers.
France and Austria’s triple-A credit rating dropped to AA+, while the ratings of Italy, Spain, Cyprus and Portugal were cut down two notches.
“In our view, the policy initiatives that have been taken by European policy makers in recent weeks may be insufficient to fully address ongoing systemic stresses in the euro zone,” the S&P agency said.
However, the ratings firm spared other European nations such as Germany, Belgium, Luxemburg, and the Netherlands.
Germany retains its AAA rating, remaining Europe’s number one economy.
In December, S&P placed the ratings of fifteen eurozone nations, including France and Germany on “credit watch negative.”
The worsening debt crisis, however, has forced the European governments to adopt harsh austerity measures and tough economic reforms.
There are fears that more delays in resolving the eurozone debt crisis could push not only Europe, but also the rest of the Western world back into recession.