"In our opinion, the overall creditworthiness of the now 28 EU member states has declined. In our view, EU budgetary negotiations have become more contentious, signaling what we consider to be rising risks to the support of the EU from some member states."
- Standard & Poor's credit agency
Amid optimism about recently-agreed deal on the banking union and some positive trends in economic indicators, analysts started to believe the economy is in a better stance than the ECB has stated. Nonetheless, the European Union lost its top credit rating on Friday, as the Standard & Poor's downgraded its long-term rating to AA+ from AAA. The short-term rating remained unchanged at A-1+, meaning the possibility the economy will be capable to meet its financial commitment on the obligation is strong. The downgrade, however, does not affect the sovereign ratings of each of the bloc's member, the agency noted. Back in January, the S&P gave a negative outlook for the European Union, and cut ratings of several members, including France, Italy, Spain and others. At the time being, only three countries still enjoy a triple-A status– Germany, Finland and Luxembourg.
Amid main reasons behind the downgrade, the agency cited rising tensions on budget negotiations, signalling there are risks to the support of the region from some member nations. Regarding the growth outlook, the company said the EU will stagnate this year and post a 1.4% growth in 2014. However, in 2014 growth is likely to be underpinned by resilient investment and domestic consumption.
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