Citing growing risks from debt crisis of Europe, credit ratings agency Moody's warned it may cut the triple-A ratings of France, Britain, and Austria. Moody's downgraded six other European nations including Italy, Spain, and Portugal. This move by Moody's was less aggressive than that of rival agency, Standard & Poor's, but still its action puts prized top credit rating of London in jeopardy for the first time.
After the announcement, the euro and sterling fell, with pound falling 0.4 percent to $1.5703 and the euro dipping 0.3 percent to $1.3154.
Moody's cut ratings of Italy, Portugal, Slovakia, Slovenia, and Malta by one notch and downgraded Spain by two notches.
Bart Oosterveld, managing director at Moody's sovereign risk group, said the impact on financial markets and credit ratings "would be quite profound" if Greece were to leave the European Union. "The markets are better in the short term but probably not in the longer term," Oosterveld told Reuters in an interview. "We think the markets remain quite fragile."
"This is proof that, in the current global situation, Britain cannot waver from dealing with its debts," Britain's Finance Minister George Osborne said. "This is a reality check for anyone who thinks Britain can duck confronting its debts."
"The government is determined to press ahead with its actions to boost growth and competitiveness, notably the reform of the financing of welfare, of employment and the reduction of public deficits," France's Finance Minister Francois Baroin said in a statement.