The London Daily News

14 January, 2012 09:12 (GMT +01:00)

Euro crisis now hitting the core nations in EU

City News Desk

Standard & Poor's decision to downgrade France’s credit rating from the top level AAA credit rating and downgrade eight other European countries has highlighted that the Euro-zone crisis is not a problem for the southern EU economies but one that has now hit the core according to a European law maker.

"The Euro crisis is not only damaging to southern economies but is now dragging larger EU economies into the mess" according to London MEP Syed Kamall who represents London on the European and Economic Affairs Committee in the European Parliament.

S&P when it made the decision to downgrade France and other EZ countries will now make it more expensive for European governments' borrow money than at current levels.

Syed Kamall MEP for London said:

"My view is that an orderly exit from the Euro for Greece need not spell the end of the currency union. It could actually reassure the markets that the currency can be reformed and made to work by encouraging weaker members to leave."

Stocks across Europe fell on Friday as the downgrade news spread which filtered through to the trading floors of Europe and across the Atlantic to the US.

Analysts had been expecting a more "severe" downgrade of France S&P had threatened last month to knock France's credit rating down by two levels. Friday’s new credit rating will now see France at a “AA+” on par with the United States one point.

The countries that have seen a downgrade include Austria lost its AAA status, while Italy and Spain fell by two notches and Portugal's debt was consigned to junk. S&P also cut ratings on Malta, Cyprus, Slovakia and Slovenia.

"Either the Eurozone countries come up with a feasible plan to keep the Euro together which involves fiscal transfers or let the weaker economies leave", said Kamall on LBC 97.3 speaking to LBC presenter Ian Dale.

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