Eurozone faces downgrade

EurozoneStandard & Poor's (S&P) Ratings Services warns the eurozone may loose its AAA long-term sovereign debt rating.

The monetary bloc is now collectively on CreditWatch “with negative implications”, suggesting that a downgrade is likely.

The ratings agency says the the “systemic stresses” in the eurozone have risen to a degree, which puts downward pressure on the credit standing of the eurozone as a whole.

Credit conditions in most of the 15 member states have tightened while the risk premiums on sovereign debt has been rising, it says. This has also affected countries with AAA ratings.

Disagreements among eurozone leaders about how to tackle the market confidence crisis and how to ensure greater economic, financial, and fiscal convergence was another factor S&P took into consideration.

The ratings agency also pointed to high levels of government and household debt in many countries while warning of a rising risk of recession.

©2011 funds europe