Key eurozone leaders have used the press this morning to voice strongly held views of Standard & Poor's move yesterday to put 15 eurozone countries on negative credit watch.
Key eurozone leaders have used the press this morning to voice strongly held views of Standard & Poor’s move yesterday to put 15 eurozone countries on negative credit watch.
The head of eurozone finance ministers Jean-Claude Juncker told German radio this morning he found the timing of S&P’s move – in the same week EU leaders meet in Brussels to try to form a decisive solution to the bloc’s problems – “astounding”, and excessively exaggerated.
He recommended people not take S&P’s action too seriously, according to the Frankfurter Allgemeine Zeitung, but he added the move was a knock-out blow for all states that are trying to reduce their deficits.
This is arguably the third round in a long battle between ratings agencies and eurozone leaders.
The first was the agencies downgrading Portugal and Ireland to junk, and then rejecting France’s proposal to allow a debt rollover in Greece’s second rescue package.
In the second round single market commissioner Michel Barnier complained Moody’s, Fitch and S&P controlled over 90% of the credit rating market.
He proposed measures to introduce more competition, and make their analysis more transparent. Eurozone politicians were also said to be considering banning ratings on countries covered by international rescue packages, and creating a rival European agency.
If politicians have been hostile to the agencies, S&P was yesterday just as willing to direct harsh words at the eurozone’s political classes.
It noted “concerns [about] deepening political, financial, and monetary problems within the eurozone. The lack of progress the European policymakers have made so far in controlling the spread of the financial crisis may reflect structural weaknesses in the decision-making process within the eurozone and European Union.
“This, in turn, informs our view about the ability of European policymakers to take the proactive and resolute measures needed in times of financial stress. We are therefore reassessing the eurozone’s record of debt-crisis management and its implications for our view on the effectiveness of policymaking.”
Politicians across the border in France were slightly more diplomatic in their response to S&P’s move.
Foreign minister Alain Juppe said France was aware “we must take greater steps than other countries, that is clear”.
He said S&P’s move was “a threat, but not a decision. But it goes without saying it must be taken seriously.”