France loses AAA in euro downgrade - The Washington Post: Standard & Poor’s downgraded the credit ratings of France and eight other European nations Friday, further weakening the region’s finances and potentially raising costs for governments at a time when they already face a debt crisis.
The downgrade robs France of its prized AAA rating, despite vows by the French government to defend its pristine standing through recent measures to cut spending and raise taxes.
President Nicolas Sarkozy’s failure to win that battle could bode ill for the entire 17-nation euro zone — as well as for his own chances in an upcoming election.
The downgrades will likely increase borrowing costs for the affected governments as they try to raise hundreds of billions of dollars on international bond markets this year. France alone needs to borrow about $240 billion to finance its existing debts and annual deficit. Italy and Spain, two large nations that are facing escalating debt problems, were also among the countries downgraded.
The S&P actions could also undermine the effectiveness of the region’s bailout fund, which European leaders have been counting on to help ailing countries such as Greece and stem the crisis from spreading onward to Italy and Spain.
The downgrade robs France of its prized AAA rating, despite vows by the French government to defend its pristine standing through recent measures to cut spending and raise taxes.
President Nicolas Sarkozy’s failure to win that battle could bode ill for the entire 17-nation euro zone — as well as for his own chances in an upcoming election.
The downgrades will likely increase borrowing costs for the affected governments as they try to raise hundreds of billions of dollars on international bond markets this year. France alone needs to borrow about $240 billion to finance its existing debts and annual deficit. Italy and Spain, two large nations that are facing escalating debt problems, were also among the countries downgraded.
The S&P actions could also undermine the effectiveness of the region’s bailout fund, which European leaders have been counting on to help ailing countries such as Greece and stem the crisis from spreading onward to Italy and Spain.
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