Au Revoir, AAA

Standard and poor today announced the somewhat surprising news that France had lost its top AAA status. Other European countries such as; Italy, Spain, Portugal and Cyprus were also cut two notches prompting a large fall in stock markets.

Spain: Downgraded from: AA- to A
Austria: Downgraded from: AAA to AA+
France: Downgraded from: AAA to AA+
Italy: Downgraded from: A to BBB+
Portugal: Downgraded from: BBB- to BB-

The news comes at a terrible time for Nicholas Sarkozy, with elections looming there is a real danger that the latest set of bad news will undermine his bid to become President once more. The bad news has also meant that the euro has reached a new low to the dollar whilst also dropping against the pound at 82.9p.

This fall in credit ratings for such a large number of countries can only spell bad news for the European Union. It now means that borrowing costs are going to be vastly inflated for those whose credit rating has been cut and will further deter investors from feeding much needed money into Europe to try and overcome the economic crisis.

The European Union is now relying upon the European Central bank to ease the crisis through quantitative easing a measure that Angela Merkel, the German Chancellor has thus far prohibited.