You are here: » Home » Stock Market News » Ratings agency warns Europe it risks being downgraded from AAA

Ratings agency warns Europe it risks being downgraded from AAA

Published:  5 Sep at 9 AM

Credit ratings agency Moody’s has warned that the European Union faces being downgraded from its AAA status if the region’s top four economies have their creditworthiness damaged by exposure to the current debt crisis. The Netherlands, the UK, France and Germany between them currently contribute around 45 per cent of the zone’s budget revenue.

Moody’s said it was worried that at times when the AAA countries felt extreme pressure they were more likely to look inwards to servicing their own debt problems than to the other nations and the debt obligations of the European Union.

The agency also pointed out that any default on the debt obligations of the countries would inevitably have the knock on effect of disrupting the bloc’s repayments as well as the amount of money held in reserve by the EU.

Moody’s said in a statement that it was fair to assume that if the UK, France, Germany and the Netherlands were to be downgraded, then the EU’s credit rating would have to follow.

If the zone’s member states were to weaken in their commitment to budget management and the changes that have been made to the fiscal makeup of the EU then credit ratings would inevitably be downgraded as well.