Citing Eurozone Crisis, Fitch Threatens Downgrade Of 6 EU Countries
Fitch ratings agency, one of the big three, said today that it was considering downgrading the credit ratings of six Euro-zone countries. Italy, Spain, Ireland, Belgium, Slovenia and Cyprus could see their their rating cut by one or two notches.
"Fitch says that following last week's EU summit, it 'has concluded that a "comprehensive solution" to the eurozone crisis is technically and politically beyond reach.'
"It expects to complete the review of the countries' ratings by the end of January."
Fitch also kept France's rating intact, which as the AP reports is a big deal because it keeps the underpinning of the European bailout intact.
Fitch's decision, however, comes just after the EU received a rash of bad news:
-- Ireland said today that its economy had contracted 1.9 percent in the third quarter, worst than predicted. As The Guardian puts it, it signifies that "Ireland's problems are far from over." The Financial Times adds that the poor GDP numbers won't encourage other countries to take on austerity measures the way Ireland did. The FT says the news spoils "Ireland's emerging image as a 'poster boy' for other debt-laden peripheral eurozone economies."
-- The S&P downgraded six Portuguese banks to junk status. The AP reports that "the announcement cranked up the pressure on Portugal and the wider eurozone, which is scrambling to free itself from a debt crisis."
-- The AP adds: "Spain's central bank reported that debt levels for the country's 17 regions have soared 22 percent over the past year. EU officials in Brussels warned that private creditors were resisting EU efforts to write off euro100 billion ($130 billion) in Greek debts."