Standard & Poor’s cut Spain’s credit rating on Friday, sending the euro briefly lower and underlining the challenges facing Europe’s major powers as they meet G20 counterparts over the euro zone debt crisis.
S&P, whose move mirrored that by fellow ratings agency Fitch last week, cited high unemployment, tightening credit and high private-sector debt among reasons for cutting the nation's long-term rating to AA- from AA.
‘Accept finance tax’
Non-eurozone countries wanting rapid action from Europe to solve its debt crisis should drop their opposition to a financial transaction tax, German Chancellor Angela Merkel said on Friday. “It is not possible that those outside the euro zone who are asking Europe to act are at the same time refusing a financial transaction tax,” Merkel said in an allusion, among others, to the United States and Britain.
A number of countries in G20, such as Japan and Brazil, favour the creation of such a tax, while others like the US and China reject it.
Fitch ratings agency downgraded Swiss bank UBS on Thursday while putting 12 other major European and US banks on negative ratings watches, amid worries over fragile global growth. UBS was dropped one notch on the basis that Fitch no longer believes the Swiss government is an absolute guarantor of its stability.
Among the 12 banks were Deutsche Bank, Goldman Sachs, and Morgan Stanley.