Ratings Agency Fitch has admitted that a solution to the euro debt crisis is “beyond reach.”
In a statement the ratings agency said: "Following the EU Summit on 9-10 December, Fitch has concluded that a 'comprehensive solution' to the eurozone crisis is technically and politically beyond reach.”
The announcement comes after it confirmed that France will keep its triple-A rating but will have its outlook revised by Fitch to “negative” from “stable”. A negative rating means that a downgrade is possible within the next 12 months.
Fitch said that the change in outlook was as a result of the increased risk of government liabilities emerging from the euro debt crisis.
Fitch also said it was considering downgrading the credit ratings of six other heavily indebted eurozone countries that have already been given a negative outlook; Spain, Italy, Ireland, Cyprus, Belgium and Slovenia.
The six countries credit ratings have now been placed on “credit watch negative”, meaning that a downgrade is possible within three months.
Over the past week, since the end of the European summit in Brussels in which David Cameron used the UK’s veto, there has been a diplomatic row brewing between France and the UK over the relative merits of each economy and which country should be seen as at most risk of losing its triple-A rating.
Nick Clegg has attempted to diffuse the row and claimed that comments from senior French politicians were “simply unacceptable.”
The head of the French Central Bank, Christian Noyer said that the UK should have its credit rating cut before France. However, it appears that Fitch themselves disagree. Fitch says that out of all the eurozone countries with a triple-A rating, France is most exposed should there be an intensification of the crisis.
A statement from Fitch said:"Relative to non-euro area 'AAA' peers, notably the US and the UK, the risk from contingent liabilities from an intensification of the eurozone crisis is greater in light of its commitments to the European Financial Stability Facility and the European Stability Mechanism, as well as indirectly from French banks that are less strong than previously assessed as reflected in recent negative rating actions by Fitch."
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