France’s rating has been downgraded by S&P, say French TV channels, citing government sources. The rumors of a possible downgrade have been circulating since the end of the year.
There have also been reports that the agency could downgrade other countries.
The French Channels say the eurozone’s leading economy Germany is not likely to be downgraded, even though it was one of the 15 eurozone countries put on a credit watch negative list by S&P in December. The agency said then it was
Euro has been falling for the last month, losing over 3 percent against dollar since December 13.
Talk about an EU countries downgrade has caused nervousness through European and international markets, often outweighing attempts by EU leaders to put a positive spin on the economy.
Analysts say France’s downgrade is expected because of the country’s extensive involvement in the European Central bank, and bailing out Greece and Portugal. The ECB has made massive money injections to European economies in the recent month. On Thursday, the ECB President said the strategy of battling Europe’s debt crisis is starting to work.
The move could weaken the country’s ability to borrow. France needs to find another 400 billion euro (US$506 billion) to stay afloat, covering its repayments of existing debt, interest owed and new borrowing. An extra 1% would cost French taxpayers 4 billion euro a year.