Europe faces long period of economic stress
Monday, 16 January 2012German Chancellor Angela Merkel says the recent downgrades of credit ratings of nine European countries shows that the European Union has a "long road" ahead to restore investor confidence.
Merkel spoke to reporters Saturday in the northern German city of Kiel. She said the downgrade was not a surprise and said the eurozone will hasten implementation of its long-term bailout fund known as the European Stability Mechanism.
Credit-rating company Standard and Poor's, one of three worldwide agencies, made the downgrades Friday, citing that state leadership is failing to move quickly enough to reinforce the troubled eurozone's balance sheets.
France lost its top-tier AAA rating, while Italy and Spain were downgraded by two steps. Germany, which has Europe's largest economy, has retained its triple-A rating for the time being.
Downgrades of credit ratings are likely to increase the cost of borrowing money for those governments.
French Finance Minister Francois Baroin said the downgrade "bad news," but "not a catastrophe." He said credit ratings agencies would not dictate French economic policies.
In Greece, where the European debt crisis began, a team of private lenders talked with government leaders on Friday but were not able to reach an agreement to help reduce the nation's debt.
