DUBLIN-France, the United Kingdom and Austria are in jeopardy of loosing their triple-A ratings from Moody’s rating agency.
Six European countries including Spain, Italy and Portugal have suffered downgrades from Moody’s, who have cited “uncertainty over the euro area’s prospects for institutional reform of its fiscal and economic framework and the resources that will be made available to deal with the crisis,” as contributing factors for the latest downgrades.
Moody’s believe that Europe has a weak macroeconomic prospect and therefore this threatens the implementation of domestic austerity programmes and the structural reforms that are needed to promote competitiveness.
Moody’s say that the above factors will result in market confidence remaing fragile.
“To a varying degree, these factors are constraining the creditworthiness of all European sovereigns and exacerbating the susceptibility of a number of sovereigns to particular financial and macroeconomic exposures,” said Moody’s who added that these constraints have also prompted the rating agency to “change to negative the outlooks on the AAA ratings of Austria, France and the United Kingdom.”
It should be noted that a major factor limiting the magnitude of Moody’s rating adjustments is “the European authorities’ commitment to preserving the monetary union and implementing whatever reforms are needed to restore market confidence.”
It is not all bad news because Nordic countries such as Denmark, Finland, Sweden as well as Germany, Luxembourg and the Netherlands have all maintained their triple-A status.