(20 December 2011 — Europe) Credit rating agency Fitch told the euro zone on Friday it believes a comprehensive solution to the bloc’s debt crisis is beyond reach, as it put a number of the bloc’s economies including Italy on watch for potential downgrades.France’s top-notch triple-A rating was reaffirmed, however Fitch said the outlook was negative over longer term.
Fitch said that following the EU summit a week ago it had concluded that ‘a ‘comprehensive solution’ to the eurozone crisis is technically and politically beyond reach.
‘Of particular concern is the absence of a credible financial backstop. In Fitch’s opinion this requires more active and explicit commitment from the ECB to mitigate the risk of self-fulfilling liquidity crises for potentially illiquid but solvent Euro Area Member States,’ Fitch said.
It put Belgium, Spain, Slovenia, Italy, Ireland, and Cyprus on negative watch. Another ratings agency, Standard & Poor’s, had already warned 15 of the currency bloc’s 17 members they were close to a downgrade.
Meanwhile, a first draft of a planned fiscal union treaty among euro zone countries and aspiring members, published on Friday, showed that countries could be taken to the European Court of Justice if they fail to meet agreed budget targets.