S&P cuts EU outlook to negative
The ongoing Greek debt crisis, combined with growing fears that the United Kingdom could vote to leave the European Union has taken a toll the bloc's credit rating.
The outlook on the EU's debt was lowered to negative from stable by Standard & Poor's on Monday, raising the risk that it would lose its current AA+ rating.
In a statement, S&P said:
The outlook revision reflects the following:
Our expectation that the EU will provide first-loss guarantee support for financing connected to the Juncker Plan;
Further downward pressure on the average weighted rating on net budgetary contributors to the EU, as indicated by our negative outlooks on the second- and third-most important sovereign contributors, the U.K. and France (Germany is the largest contributor); and
The EU's repeated use of its balance sheet to provide higher-risk financing to EU member states (most recently including Greece), without the member states' paying in capital.