Moody's signals doubts on EU debt risks

22nd November 2005, Comments 0 comments

PARIS, Nov 22 (AFP) - The ratings agency Moody's said on Tuesday that the rejection of the EU constitution by France and the Netherlands raised doubts about the direction of the 25-member bloc which would become a decisive issue in calculating future debt ratings for member states.

PARIS, Nov 22 (AFP) - The ratings agency Moody's said on Tuesday that the rejection of the EU constitution by France and the Netherlands raised doubts about the direction of the 25-member bloc which would become a decisive issue in calculating future debt ratings for member states.

"The uncertainty about the future shape and strength of the EU and its member countries offers the potential for long-term risks and policy challenges," the ratings agency said in a report on the European Union.

Moody's, which assesses the risks for investors, underlined that none of its ratings or outlooks had changed for EU member states, but that the pace of future reforms would have "major economic and financial implications".

In particular, Moody's said it would monitor whether the EU would "recommit itself to reform and achieve higher growth rates to face current and future fiscal expenditures, and whether the region will succeed in increasing economic efficiency while maintaining an acceptable degree of social cohesion".

Ratings given to member states by Moody's are important in determining the interest rates that governments must offer to investors when issuing bonds.

France and the Netherlands both rejected the EU constitution in referendums in June this year.

Copyright AFP

Subject: French news

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