Eurozone on brink as spectre of credit rating cut looms

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THE eurozone was last night teetering on the brink of even deeper crisis as credit rating agency Standard & Poor’s placed the entire European Union on a watch list for a possible downgrade.

The agency said it may cut the EU’s AAA long-term issuer credit rating, if it lowers the current AAA ratings in one or more member states. The agency placed 15 of the 17 eurozone members under CreditWatch negative on days ago.

The move piles more pressure on David Cameron, who travels to Brussels today ahead of a European Council summit. Yesterday the row over a Franco-German plan to try and save the euro intensified when London Mayor Boris Johnson demanded a referendum if talks resulted in a new treaty. Mr Johnson was joined by Northern Ireland Secretary Owen Paterson, who also suggested that a referendum would be an “inevitable” result of proposals for closer fiscal union in the eurozone.

Mr Cameron has pledged to safeguard Britain’s interests, insisting he wanted “more power and control” for the UK to protect the financial services sector and the City of London. But he came under fire from Labour leader Ed Miliband, who accused him of going back on promises that he would use any treaty changes to repatriate powers. Mr Cameron rejected the claims, saying: “The more the countries of the eurozone ask for, the more we will ask for in return.”

Mr Johnson insisted any treaty that created fiscal union should be either vetoed by the UK or put to a public vote. “The real problem we have got now is everybody is desperately scrabbling around to try and patch this thing together and to keep the euro in its current form whole and not to let anybody escape, not to let anybody devalue and – to use the rather graphic phrase of someone the other day – I think we are in danger of saving the cancer and not the patient.”