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Moody's changes EU rating outlook to negative

The move will add pressure on ECB to provide details of new debt-buying scheme to help euro zone states

Reuters  |  Sydney  

Service has changed its outlook on the rating of the European Union to negative, warning it might downgrade the bloc if it decides to cut the on the EU's four biggest budget backers: Germany, France, and Netherlands.

The move will add to pressure on the European Central Bank to provide details of a new debt-buying scheme to help deeply indebted euro zone states at its policy meeting on Thursday.

Back in July, changed its outlook for Germany, the Netherlands and Luxembourg to negative as fallout from Europe's debt crisis cast a shadow over its top-rated countries. The outlook on and the are also negative.

"The negative outlook on the EU's long-term reflects the negative outlook on the of the member states with large contributions to the budget: Germany, France, the and the Netherlands, which together account for around 45 percent of the EU's budget revenue," the ratings agency said.

said the EU's rating would be particularly sensitive to any changes in the ratings of these four member states, implying that if it downgraded these four it might also cut the EU's rating.

Likewise, Moody's said the outlook for the could go back to stable if the outlooks on the four key Aaa countries also returned to stable.

The agency also changed to negative the outlook the European Atomic Energy Community (Euratom), on whose behalf the European Commission is also empowered to borrow.

First Published: Tue, September 04 2012. 04:10 IST