Friday

29th Mar 2024

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

Get the EU news that really matters

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.

'Swiftly dial back' interest rates, ECB told

Italian central banker Piero Cipollone in his first monetary policy speech since joining the ECB's board in November, said that the bank should be ready to "swiftly dial back our restrictive monetary policy stance."

Opinion

EU Modernisation Fund: an open door for fossil gas in Romania

Among the largest sources of financing for energy transition of central and eastern European countries, the €60bn Modernisation Fund remains far from the public eye. And perhaps that's one reason it is often used for financing fossil gas projects.

Latest News

  1. Kenyan traders react angrily to proposed EU clothes ban
  2. Lawyer suing Frontex takes aim at 'antagonistic' judges
  3. Orban's Fidesz faces low-polling jitters ahead of EU election
  4. German bank freezes account of Jewish peace group
  5. EU Modernisation Fund: an open door for fossil gas in Romania
  6. 'Swiftly dial back' interest rates, ECB told
  7. Moscow's terror attack, security and Gaza
  8. Why UK-EU defence and security deal may be difficult

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Join EUobserver

EU news that matters

Join us