France and UK both warned Moody's may soon cut its credit ratings
France has been warned its credit rating may be cut in the future, meaning borrowing costs may increase as a result. Austria and the UK have also been warned while Italy, Spain and Portugal's ratings have been lowered.
Austria, France and the UK have all been told ratings have been put on "negative outlook", this implies all three nations could lose the AAA credit rating they enjoy within the next 18 months. The eurozone crisis has seen France and the UK introduce a number of austerity measures in an effort to stabilise growth prospects in the economy. However the eurozone crisis has left the economy stagnant or very slow moving in both France and Britain, potentially resulting in a loss of the credit rating despite the imposition of the austerity measures.
Moody's credit rating agency said:
Increased uncertainty regarding the pace of fiscal consolidation in the UK [and France] due to materially weaker growth prospects over the next few years, with risks skewed to the downside.
Britain's Chancellor George Osborne attempted to play down the warning saying the comments
from the US agency was not a criticism of his government's economic policy. Mr Osbourne told the BBC
: "This is yet another organisation - in this case a credit ratings agency - warning Britain that if we spend or borrow too much we're going to lose our credit rating."
On the French issue
Moody's said there were "significant risks to the French government's ability to achieve its fiscal consolidation targets [and] could be further complicated by a need to support other European sovereigns or its own banking system."