video Business

Rating cut warning for UK and France

Tuesday, February 14, 2012 - 02:14

Feb. 14 - Rating agency, Moody's, has downgraded six European nations including Spain and Italy, and put three others on a watch list. It's the first threat triple A-rated UK has had to face. Joanne Nicholson reports.

▲ Hide Transcript

▶ View Transcript

Europe's politicians faced the media after news from one of the main three rating's agencies hit. Moody's has warned it may cut the triple A ratings of France, Britain and Austria. It downgraded six other European nations including Italy, Spain and Portugal. In France, the socialist presidential candidate was playing down the threat to his country's economy. Francois Hollande said France was not Greece. (SOUNDBITE) (French) SOCIALIST PRESIDENTIAL CANDIDATE FRANCOIS HOLLANDE SAYING: "Let's be serious. We're not in that situation and those who make those comparisons are doing so to worry the French." It's the first time Britain's top tier rating has been at risk and finance minister, George Osborne, says he's going to keep his promise to slash the budget deficit: (SOUNDBITE) (English) GEORGE OSBORNE, BRITISH FINANCE MINISTER, SAYING: "I think this is a reality check.- that Britain must not waver in dealing with these debts. The British government's not going to do that and we're going to go on commanding investor confidence in Britain." Moody's said it was worried about Europe's ability to implement the reforms needed to address the crisis. The euro and sterling fell slightly after the announcement but the markets seemed little affected. In Germany, the DAX opened with only light losses. Trader Robert Halver. (SOUNDBITE) (German) ROBERT HALVER, TRADER WITH BAADER BANK, SAYING: "'Even the biggest pain coming from the rating agencies are losing momentum right now. I guess right now, the rating agencies are losing definitely their influence on the financial markets." It's the third downgrade for Italy - S&P and Fitch both did the same last month. But many in Italy and Spain believe the agencies don't appreciate just how much their governments are doing (SOUNDBITE) (Spanish) MADRID RESIDENT SAYING: "I think the government is making an important effort to try to fix the situation which is very bad and credit agencies are still downgrading." (SOUNDBITE) (Italian) ROME RESIDENT FRANCESCO MOLLICA SAYING: "I believe speculation is behind these downgrades, it's big powers playing games that always push governments to adopt unpopular measures." Germany's triple A rating remained unchanged. The euro zone's bailout fund also retained its top tier status. Joanne Nicholson, Reuters