Finance News

France Downgraded. Is this the first of Many?

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France has confirmed that the ratings agency Standard and Poors has downgraded its AAA rating one notch to AA+. Austria is also expect to lose its AAA rating but S&P have declined to comment. An announcement is expect later from S&P.

Most of the other eurozone countries are already on lower ratings however others like Spain, Italy, and the Irish Republic are expected to also have their ratings cut further by S&P. Belgium, Luxembourg, the Netherlands and Germany are widely expected to be unaffected by the latest round of cuts.

Moodys and Fitch have not yet announced any such ratings cuts and France and Austria still have their AAA ratings in tact with them. [Harry: To be honest if one agency cuts it's rating it's usually just a matter of time before another follows suit]

The rumour of the cuts sent a run on the euro driving it back to its 16-month lows against the dollar before regaining some of it’s losses.[Harry: I said it before I'll say it again, "Buy on the rumour sell on the news"].

It’s been a bad day for the Eurozone with talks between Greece and it’s private sector lenders coming to a standstill earlier today. If these talks do not end with the private sector allowing Greece to write off 50% of the debt it owes then it could see the end of the Euro in Greece.

Francois Baroin [the French Finance Minister] said, “It’s not good news, but it’s not a catastrophe.” He also said, “It’s not ratings agencies that decide French policy.” [Harry: They don't decide French policy but they sure as hell haven't made an already bad situation any better.]

[Harry: Bad day for the Eurozone and it could still get worse, but then again it is Friday the 13th]

For more on this story and others check out BBC news