Brussels, 04/07/2012 (Agence Europe) - On Tuesday 3 July, credit rating agency Standard and Poor's (S&P) welcomed decisions by the eurozone leaders taken at the 28-29 European summit: “In Standard & Poor's Ratings Services' view, these agreements could help to stabilise the eurozone and staunch any further weakening of sovereign creditworthiness (see EUROPE 10645)… However, we believe the risks associated with implementing these measures are significant, and it is unclear to us whether policymakers will be able to build on the agreements.”
Nevertheless, “Standard & Poor's believes that the decisions made at the summit reflect policymakers' growing recognition that the current crisis is not exclusively a budgetary crisis of excessive public debt and deficits, but that it's also a balance-of-payments crisis and we see the broadening of the policy response as a positive step.” Yet, “none of the measures addresses directly the root of the crisis, and risks related to implementing the measures are substantial” and therefore S&P will not be upgrading eurozone countries just yet. It will comment on the economic situation in the eurozone on Thursday, the same day as a meeting of the ECB Governing Board. The ECB may decide to lower the interest rate, which currently stands at 1%, in order to stimulate growth.
On Friday, at the end of the European summit, Fitch credit rating agency commented: “We said on Friday that the results of the summit exceeded our expectations” and the plan for a single bank supervisory authority could improve the way economic and monetary union operates. (EL/transl.fl)