Agency cuts the EU’s credit rating

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Credit agency Standard & Poor’s cut its triple-A rating of the European Union by one notch yesterday, 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, signalling 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.

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