Tuesday, December 6, 2011

Markets slide after S&P threatens 15 out of 17 eurozone nations with credit rating downgrades, a move which may undermine French and German plans

Standard & Poor's has warned it may carry out an unprecedented mass downgrade of euro zone countries, including Germany and France, if EU leaders fail to deliver a convincing agreement on how to solve the region's debt crisis in a summit on Friday.

The ratings warning sent markets reeling and drew a rebuke from Eurogroup Chairman Jean-Claude Juncker, who said he was "astonished" by S&P's statement, describing it as "a wild exaggeration and also unfair."

The agency's warning it may downgrade 15 countries came hard on the heels of a Franco-German initiative to enforce budget discipline across the 17-member zone through EU treaty changes.

President Nicolas Sarkozy and Chancellor Angela Merkel told reporters that their plan, to be discussed at Friday's summit , included automatic penalties for states that fail to keep deficits under control, and an early launch of a permanent bailout fund for euro states in distress.

They said they wanted treaty change to be agreed in March and ratified after France wraps up presidential and legislative elections in June. "We need to go fast," Sarkozy said. Read More