European leaders critical of S&P's debt downgrades

AP News
Posted: Jan 13, 2012 7:30 PM
European leaders critical of S&P's debt downgrades

After Standard & Poor's downgraded the government debt of France, Italy, Spain, Austria and five other nations that use the euro, some European leaders said the move was unjustified. But most said the downgrades wouldn't severely hurt their ability to fight off the continent's debt crisis.

A look at some reactions:


Speaking on France-2 Television, French Finance Minister Francois Baroin said the loss of the triple-A rating was not "a catastrophe" and underscored that France still had a solid AA+ rating.

"The United States, the world's largest economy, was downgraded over the summer," he said. "You have to be relative, you have keep your cool. It's necessary not to frighten the French people about it."

Meanwhile, with just under 100 days until the start of the French presidential election in two rounds in April and May, the opposition Socialists pounced.

Party leader Martine Aubry issued a statement saying the "loss of the AAA is a rebuke of the policies taken since 2007" _ the year Sarkozy was elected.

"Whatever one thinks of the ratings agencies, it's bad news, and even more so because the French people are going to pay the price. It could've been avoided," she wrote.


An official with the Economy Ministry who spoke on condition of anonymity because of ministry policy said:

"We take note of the agency's decision. It is a legacy of the past (the administration of the former Socialist government), as well as others. The goal of this government is to recover Spain's economic growth potential so that this situation will be reversed in the near future. We reiterate that economic policy is committed to balanced budgets and structural reforms."


The office of Italian Prime Minister Mario Monti declined to comment.


The Finance Ministry said there were "significant methodological shortcomings" in the S&P appraisal because it overlooked the bailed-out country's debt-reduction and economic reform efforts.


European Commission Vice President Olli Rehn said he "regrets" S&P's decision, which he deemed "inconsistent." He said the euro area has taken "decisive action in all fronts of its crisis response" to push reforms and strengthen banks.

Eurogroup President Jean-Claude Juncker stressed that governments that use the euro have already taken far-reaching measures to ease tensions in the debt markets. He said eurozone countries are determined to do "whatever it takes" to recover from the debt crisis and return to growth.


Nigel Farage, leader of Britain's U.K. Independence Party, which has no lawmakers at the House of Commons and favors withdrawal from the European Union, said the rating decision could cause the eurozone to collapse.

"This downgrade of France's credit rating will make its debt more expensive and may prove to be the beginning of the end for eurozone as we know it," Farage said.


"It's not a decision about Slovakia but about the situation in the eurozone. It's a pressure on the EU to effectively deal with the debt crisis," deputy Finance Minister Vladimir Tvarozka said.