News / Economy

EU Leaders Angry About Credit Downgrade

In this photo taken with a fisheye lens, flames from a fire set alight in a container by activists of the Frankfurt Occupy movement are seen in front of the European Central Bank and a sculpture of the euro symbol in Frankfurt, Germany, November 21, 2011
In this photo taken with a fisheye lens, flames from a fire set alight in a container by activists of the Frankfurt Occupy movement are seen in front of the European Central Bank and a sculpture of the euro symbol in Frankfurt, Germany, November 21, 2011

Multimedia

Audio
Lisa Bryant

European leaders hit back Saturday at the downgrade by Standard & Poor's of the credit ratings of nine European nations, calling the move unfounded and inconsistent.

From Larnaka to Brussels, European Union officials were on the defensive Saturday, downplaying the downgrades while vowing to push through fiscal reforms.

In a widely anticipated move, the rating agency downgraded by a notch the ratings of five European countries, including the region's second-largest economy France. It downgraded four others - Italy, Portugal, Spain and Cyprus - by two notches.

The finance minister of Cyprus called the move "arbitrary and unfounded." The Austrian government also criticized the measure. European Economic and Monetary Commissioner Olli Rehn called the downgrades inconsistent.

Other politicians, like French Prime Minister Francois Fillon, sought to put a positive spin on the news.

At a press conference on Saturday, Baroin said that while S&P had downgraded France's once-sterling AAA to AA+, the agency had also confirmed the French economy was solid, diversified and resistant. It noted the government had implemented the necessary reforms and applied a credible strategy to reduce its debt and deficit.

Baroin also said a new fiscal discipline pact agreed to by European leaders last month showed they were proactive in addressing the eurozone crisis. In Germany, which retained its AAA rating, Chancellor Angela Merkel called on European leaders to move quickly to adopt the pact, which was spearheaded by France and Germany.

But S&P has criticized the European Union pact as an insufficient answer to the crisis, an assessment shared by analysts like Tomasz Michaelski of the HEC business school in Paris. Michaelski also doesn't believe the downgrades will prompt European leaders to take bolder steps when they meet at the end of January.

"I don't believe that there's going to be a general solution to the problem reached at a common European summit," said Michaelski.  "I don't believe that can happen. There are so many different interests. Each country is going to have to heal itself."

In practical terms, the downgrades mean that some countries may have to borrow money at higher costs. The EU's bailout fund may also be affected. But some analysts believe that since so many countries have been downgraded, including the United States last summer, it may have little tangible impact.

Still others, like Michaelski, say the markets may have anticipated the downgrade and may not react dramatically when they reopen on Monday.

Correction - Previously, French Finance Minister Francois Baroin was mistakely identified as Francois Filon

You May Like

Video China Investigates Powerful Former Security Chief

Analysts say move by President Xi is an effort to win more party support, take step toward economic reforms, removing those who would stand in way of change More

South Africa Land Reforms Still Contentious 20 Years Later

Activists argue that the pace of land reform is slow and biased; legal experts question how some proposed reforms would be implemented More

In Vietnam, Religious Freedoms Violated, UN Finds

Beliefs reportedly prompt heavy surveillance, intimidation and travel restrictions More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Gazans in Shelled School Sought Shelteri
X
Scott Bobb
July 30, 2014 8:16 PM
Israel's air and ground assault against Hamas-led fighters in Gaza has forced many Palestinians to flee their homes, seeking safety. But safe places are hard to find, as VOA’s Scott Bobb reports from Jabaliya.
Video

Video Gazans in Shelled School Sought Shelter

Israel's air and ground assault against Hamas-led fighters in Gaza has forced many Palestinians to flee their homes, seeking safety. But safe places are hard to find, as VOA’s Scott Bobb reports from Jabaliya.
Video

Video Rapid Spread of Ebola in West Africa Prompts Global Alert

Across West Africa, health officials are struggling to keep up with what the World Health Organization describes as the worst ebola outbreak on record. The virus has killed hundreds of people this year. U.S. President Barack Obama and other world leaders are watching the developments closely as they weigh what actions, if any, are needed to help contain the disease.
Video

Video Michelle Obama: Young Africans Need to Embrace Women's Rights

U.S. first lady Michelle Obama urged some of Africa's best and brightest to advocate for women's rights in their home countries. As VOA's Pam Dockins explains, Obama spoke to some 500 participants of the Young African Leaders Initiative, a six-week U.S.-based training and development program.
Video

Video Immigrant Influx on Texas Border Heats Up Political Debate

Immigrants from Central America continue to cross the U.S.-Mexico border in south Texas, seeking asylum in the United States, as officials grapple with ways to deal with the problem and provide shelter for thousands of minors among the illegal border crossers. As VOA's Greg Flakus reports from Houston, the issue is complicated by internal U.S. politics and U.S. relations with the troubled nations that immigrants are fleeing.
Video

Video Study: Latino Students Most Segregated in California

Even though legal school segregation ended in the United States 60 years ago, one study finds segregation still occurs in the U.S. based on income and race. The University of California Los Angeles Civil Rights Project finds that students in California are more segregated by race than ever before, especially Latinos. Elizabeth Lee reports for VOA from Los Angeles.
Video

Video Vietnamese Staging Chinese Product Boycott After Oil Rig Spat

China recently pulled an oil rig from an area of the disputed South China Sea that Vietnam also claims. Despite the action, the incident has had a lingering effect on consumers in Vietnam. VOA's Reasey Poch reports from Hanoi on an effort to boycott Chinese products.
Video

Video A Summer Camp for All the World

VIDEO: During workshops and social gatherings, the Global Youth Village summer camp encourages young people to cooperate and embrace their differences, while learning to communicate with people from other countries. VOA's Deborah Block has more.
Video

Video From Cantankerous Warlock to Incorruptible Priest, 'Harry Potter' Actor Embraces Diverse Roles

He’s perhaps best known as Mad Eye Moody, the whimsical wizard in the Harry Potter franchise. But character actor Brendan Gleeson's resume includes dozens of films, and he embraces all the characters he inhabits with equal passion. In an interview with VOA’s Penelope Poulou, Gleeson discussed his new drama "Calvary" and his secret to success.

AppleAndroid

World Currencies

EUR
USD
0.7305
JPY
USD
101.53
GBP
USD
0.5830
CAD
USD
1.0656
INR
USD
60.075

Rates may not be current.