Germany, France Denounce S&P's Eurozone Warning

Sarkozy and Merkel said they would "take note" of the S&P's warning. Photo by EPA/BGNES

Germany and France have denounced Standard & Poor's warning that it may carry out an unprecedented mass downgrade of eurozone countries, a move which analysts have described as logical but tactless.

The two countries pledged to continue to "reinforce the governance of the euro area" and "foster stability, competitiveness and growth."

Sarkozy and Merkel said they would "take note" of the S&P's warning.

French Finance Minister Francois Beroin later said that - for its part - Paris did not plan to expand the austerity measures it had already has announced.

As well as Germany and France, Austria, the Netherlands, Finland and Luxembourg also currently have top AAA rating.

The ratings agency said the decision was prompted "by our belief that systemic stresses in the eurozone have risen in recent weeks to the extent that they now put downward pressure on the credit standing of the eurozone as a whole".

Analysts say S&P wants eurozone leaders to understand how much is at stake if this week's summit is another damp squib.

Though S&P's move was expected, its timing is highly controversial, according to analysts.

The news overshadowed talks in Paris between French President Nicolas Sarkozy and German Chancellor Angela Merkel, who proposed that a new EU treaty is adopted to tackle the crisis.

It also comes just days before a European Union summit on Friday that is intended to deliver a convincing agreement on how to solve the region's debt crisis.

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