The ratings agencies have been at it again: more downgrades and negative outlooks for EU sovereign debt. Moody's announced actions on nine EU states yesterday ( Monday 13 ). Unlike Standard and Poor's, Moody's has not so far downgraded France and Austria from triple A status, but has now put them on a negative outlook. Moody's put Britain, the only non-eurozone country affected, on a negative outlook as well, meaning the country could lose its triple A rating in the coming months. Italy, Portugal, Malta, Slovakia and Slovenia were all downgraded one notch, while Moody's added to Spain's woes with a two notch cut to A3.

Moody's gives uncertainty over reforms and resources available to tackle the crisis, as well as macroeconomic conditions and the resulting difficulties faced in implementing austerity measures as the motivation for the latest round of actions on sovereign debt. These factors, the ratings agency believes, will damage market confidence across the EU.

Although undoubtedly bad news, particularly for Spain, the Moody's statement offers some recognition of EU policymakers' efforts. “An important factor limiting the magnitude of Moody's rating adjustments is the European authorities' commitment to preserving the monetary union and implementing whatever reforms are needed to restore market confidence. These rating actions therefore take into account the steps taken by euro area policymakers in agreeing to a framework to improve fiscal planning and control and measures adopted to stem the risk of contagion,” reads the Moody's statement.

Liam Lever, liam@romania-insider.com