EU sees no 'alarm' after Moody's warning on France

18th October 2011, Comments 0 comments

The European Commission sought on Tuesday to downplay a warning by Moody's ratings agency that it could lower France's outlook, saying there was no reason to be alarmed about a "vague" report.

EU economic affairs spokesman Amadeu Altafaj said Paris took "important decisions" over the summer to meet requirements to reduce the country's budget deficit.

"Therefore there is no reason to raise alarms or to speculate with something that is a very vague report" by Moody's, Altafaj told a news briefing.

France enjoys the top, triple-A credit rating from all three leading credit rating agencies, Moody's, Standard & Poor's and Fitch Ratings.

But Moody's warned on Monday that it may place a negative outlook on France's top-notch credit rating in three months as the government's financial strength "has weakened."

If France's outlook is lowered from "stable" to "negative," this would mean that Moody's could eventually downgrade the country's credit rating -- an embarrassing event that hit the United States in August.

A French ratings downgrade could also have an impact on the eurozone's 440-billion-euro rescue fund, since it relies on the credit worthiness of its top contributors to help out nations in need.

Altafaj, however, refuse to comment on the possible impact on the European Financial Facility Stability (EFSF), which EU leaders are expected to reinforce at a summit on Sunday.

© 2011 AFP

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