The international rating agency Moody’s said Monday it is still reviewing the creditworthiness of European countries, because of what it called the “continued absence of decisive policy measures” to address economic and debt problems at last week’s European summit.
The agency says “the euro area, and the wider EU, remain prone to further shocks.” It said the cohesion of the countries that use the common currency remains under “continued threat.”
On Friday, all 17 countries that use the euro and many non-euro EU members agreed to a plan that includes more central oversight of countries’ budgets, in an effort to prevent them from running up the huge debts that caused the economic crisis in Europe and caused concern for the global economy. Britain opposed the plan and said it would not join.
Moody’s said the summit demonstrated that European leaders know they need to support weaker economies and control budgets and debt, but the plan announced on Friday “offers few new measures” and repeats some previous ideas that have not been implemented.
The Moody’s statement says, “The credit implications of these and further measures to be announced in coming weeks require careful consideration against the backdrop of decelerating regional economic activity, fragile banking systems, partly dysfunctional credit markets and the varying degree of success of country-specific measures aimed at structural change and fiscal consolidation.”
EU leaders hoped the plan announced Friday would calm months of volatility in financial markets by offering a long-term solution to the eurozone government debt crisis. Greece, Portugal and Ireland have already received international bailouts because of their overwhelming sovereign debt, and some analysts feared even greater needs from heavily indebted Spain and Italy.
Stock markets and the value of the euro dropped on Monday, after an initial rise on news of the agreement on Friday.
Any new treaty will have to obtain final ratification from member countries. EU officials said they expect it to be signed by March.