Credit agencies pile pressure on EU leaders

Moody's downgrades Belgium by two notches and warns that indebted countries will find it increasingly hard to fund debts

the Guardian,

16 December, 2011

European leaders are under renewed pressure to boost the firepower of the EU's multibillion-euro bailout package after Belgium's credit rating was cut.

Moody's downgraded Belgium by two notches to Aa3, its fourth highest rating. It warned that indebted eurozone countries such as Belgium will find it increasingly hard to fund their debts or achieve economic growth in the face of Europe's austerity drive.

"The fragility of the sovereign debt markets is increasingly entrenched and unlikely to be reversed in the near future," warned Moody's.

Rival ratings agency Fitch earlier said it would consider cutting Belgium's credit rating, along with those of Spain, Italy, Slovenia, Cyprus and Ireland. France's AAA credit rating remained intact for another day, although Fitch did revise its outlook down to "negative".

The latest credit rating changes came on the day that the EU released details of the "fiscal compact" deal designed to rescue the euro and prevent countries from going bust. This was published amid concerns over rising bad debt levels in European banks and the growing dependence of major lenders on funds provided by the European Central Bank.

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