S&P cuts EU's AAA rating, European officials dismiss move
By Luke Baker
BRUSSELS (Reuters) - Credit agency Standard & Poor's cut its triple-A rating of the European Union by one notch on Friday, saying it had concerns about how the bloc's budget was financed, a view EU leaders and other officials dismissed as misguided.
S&P's announcement came the day after the EU reached a deal to overhaul the region's banking sector, an agreement many commentators said fell short of expectations, although S&P said it had not factored into its credit assessment.
"In our opinion, the overall creditworthiness of the now 28 European Union member states has declined," the rating agency said in a statement that came 11 months after it announced it had a 'negative' outlook on the bloc.
"EU budgetary negotiations have become more contentious, signaling what we consider to be rising risks to the support of the EU from some member states."
European officials said they were not surprised by the move to AA+ since S&P recently downgraded the Netherlands and has lowered its view on six other member states - France, Italy, Spain, Malta, Slovenia and Cyprus - in the past year.
But they pointed out that the EU has no debt or deficit to speak of and its budget is a stand-alone entity financed by 28 countries, making it one of the most stable institutions and most reliable borrowers in the world.
"We must put it in perspective," Belgian Prime Minister Elio di Rupo told reporters as he arrived for an EU summit in Brussels. "It's just an opinion."
Italian Prime Minister Enrico Letta said the decision shouldn't be ignored and showed that Europe's economic crisis was not yet over. Continued...