Sunday

24th Sep 2023

Britain blames euro for triple-A warning

  • Westminster bridge, London. Dowgielewicz: 'We are not pleased to see the English Channel has widened' (Photo: Paul Vallejo)

The British government has blamed the euro for ratings agency worries on its triple-A status amid a widening political gap between Brussels and London.

A UK treasury spokesman told newswires on Tuesday (20 December) that exposure to the eurozone is the main reason why Moody's earlier the same day warned that Britain's top-level grade faces "formidable and rising challenges."

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

The spokesman said: "The UK is not immune to the problems facing our trading partners in the euro area; the crisis is having a chilling effect across Europe and it is important that the euro area continues to take decisive action to fix their problems."

The Moody's report noted "that no EU sovereign rating can be considered immune to this crisis." But it cited internal UK problems as the main cause of concern.

"[Britain's] near-term macroeconomic outlook has weakened, and this will likely slow the pace of its fiscal consolidation. More generally, the significant increase in the government's deficit and debt stock since 2008 has eroded its ability to absorb further macroeconomic or fiscal shocks," it said.

It added that non-euro membership is a source of strength: "[The UK's] national currency and central bank provide the UK with substantial flexibility in developing responses to economic and financial shocks."

London's take on Moody's warning is a sign of the times after Britain two weeks ago vetoed an EU Treaty change on fiscal reform.

EU-UK relations deteriorated further when core euro member France said the UK should lose its triple-A grade before France does and eurosceptic MPs in the British government said the UK should leave the Union.

In contrast, Moody's on Tuesday gave an upbeat opinion about EU newcomer Poland's credit outlook.

It "affirmed" Warsaw's A2 rating due to the government's "credible fiscal consolidation strategy" and the country's "proven track record of macroeconomic stability and resilience, even when faced with significant external shocks."

Poland is the only EU country which saw economic growth last year, giving extra weight to the outgoing Polish EU presidency's euro-optimism.

Its EU affairs minister Mikolaj Dowgielewicz on Friday told media the bloc should focus on economic growth instead of austerity, while noting that the UK is drifting into uncertain territory.

"We are not pleased to see the English Channel has widened," the minister said.

Cameron defends EU veto amid accusations of isolating Britain

In a stormy parliamentary debate highlighting the fall-out with his coalition partner, UK Prime Minister David Cameron struggled to defend his EU veto arguing he had safeguarded financial services from extra regulation, despite Brussels claiming the contrary.

EU commissioner picks fight with London after UK veto

EU economy chief Olli Rehn has warned the City of London will not escape European regulation of the financial sector and insisted there is firm legal ground for the use of the EU institutions to police a new 'fiscal compact.'

France: Agencies should downgrade 'Greece-like' UK

Anglo-French relations plumbed new depths on Thursday when the French central bank said ratings agencies should downgrade Britain and its finance minister compared the UK to Greece.

Latest News

  1. Europe's energy strategy: A tale of competing priorities
  2. Why Greek state workers are protesting new labour law
  3. Gloves off, as Polish ruling party fights for power
  4. Here's the headline of every op-ed imploring something to stop
  5. Report: Tax richest 0.5%, raise €213bn for EU coffers
  6. EU aid for Africa risks violating spending rules, Oxfam says
  7. Activists push €40bn fossil subsidies into Dutch-election spotlight
  8. Europe must Trump-proof its Ukraine arms supplies

Stakeholders' Highlights

  1. International Medical Devices Regulators Forum (IMDRF)Join regulators, industry & healthcare experts at the 24th IMDRF session, September 25-26, Berlin. Register by 20 Sept to join in person or online.
  2. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  3. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA
  4. International Medical Devices Regulators Forum (IMDRF)Join regulators & industry experts at the 24th IMDRF session- Berlin September 25-26. Register early for discounted hotel rates
  5. Nordic Council of MinistersGlobal interest in the new Nordic Nutrition Recommendations – here are the speakers for the launch
  6. Nordic Council of Ministers20 June: Launch of the new Nordic Nutrition Recommendations

Join EUobserver

Support quality EU news

Join us