Prospect of lower ratings looms on Eurozone nations by S&P

Fifteen of the seventeen Eurozone countries are under scanner by the US credit rating firm Standard and Poor (S&P) for their failure to tackle financial crisis. Countries that are likely to be affected by Standard and Poor’s announcement on Monday include some of the heavy-weights known for their fantastic credit worthiness until recently. Nations about to be stripped off their triple-A credit status are Germany, Netherland, Finland, Austria, France and others. The only two countries who are unaffected by this recent development is Greece and Cyprus (already downgraded).

The negative prediction by S&P is based on the growing fear that Eurozone financial crisis may no longer be restricted to member countries using Euro currency only. The crisis could soon have a cascading effect on the entire Europe. As per Standard and Poor, the unfolding of five inter-related factors have resulted in deepening of Eurozone crisis. These five critical factors are - Severe credit crunch, failure of affected countries to boost market confidence as well as absence of an uniform policy to address the crisis of EU nations, growing credit risk even in nations boosting AAA ratings, prospect of recession in Euro zone in 2012 and increase in government and household loans.

Policymakers questioned the timing of Standard and Poor in coming up with the announcement on Tuesday when the entire EU nations are waiting for Thursday's EU summit. Reducing the ratings of countries before the EU summit may worsen the current crisis.