[QODLink]
Europe

S&P cuts EU rating over tense budget talks

Credit rating agency also points at worsening creditworthiness of the bloc's members as another reason for its decision.

Last updated: 20 Dec 2013 11:53
Email Article
Print Article
Share article
Send Feedback
S&P said that cohesion among EU members had lessened [GETTY]

Standard & Poor's has downgraded the European Union's long-term credit rating, stripping the bloc of the highest grade of AAA to AA+, citing rising tensions on budget negotiations.

The move follows cuts to the ratings of EU member states in recent months.

The credit rating agency said on Friday that a bitter battle over the EU budget and worsening creditworthiness of its members are behind the decision to decrease the bloc's long-term issuer credit rating by one grade.

"In our opinion, the overall creditworthiness of the now 28 EU member states has declined," S&P said in a statement.

"In our view, EU budgetary negotiations have become more contentious, signaling what we consider to be rising risks to the support of the EU from some member states."

S&P said cohesion among EU members had lessened and that some might baulk at funding the EU budget on a pro-rata basis.

Average rating of contributors dropped

The average rating of net contributors to the EU budget has fallen to AA+ from AA since January 2012, when S&P revised its outlook on the long-term EU rating to negative, the company said.

S&P has had a negative outlook on the EU since that date and has since cut its ratings on members France, Italy, Spain, Malta, Slovenia, Cyprus and the Netherlands.

The EU is not a sovereign but it can borrow in its own name. As of this month, it had outstanding loans of 56 billion euros ($76.5 billion), according to S&P.

The credit-rating agency said its downgrade of The Netherlands last month left the EU with six AAA-rated members. Since 2007, revenues contributed by AAA-rated sovereigns as a proportion of total EU revenues nearly halved to 31.6 percent, it added.

284

Source:
Agencies
Email Article
Print Article
Share article
Send Feedback
Featured on Al Jazeera
More than one-quarter of Gaza's population has been displaced, causing a humanitarian crisis.
Ministers and MPs caught on camera sleeping through important speeches have sparked criticism that they are not working.
Muslim charities claim discrimination after major UK banks began closing their accounts.
Italy struggles to deal with growing flood of migrants willing to risk their lives to reach the nearest European shores.
Featured
People are starving in southern Somalia while relief efforts are blocked by government and rebel fighting.
Some scientists say authorities in favour of nuclear energy tend to deny the negative results of researchers.
Report on child sex abuse in British Asian community highlights issues that may affect the entire nation.
Taliban makes quick gains in Afghanistan with little opposition from Afghan army as US withdrawal begins.
Experts from Minamata, Japan check for signs of mercury illnesses in Ontario, Canada.
join our mailing list