Solution for Europe is beyond reach, says ratings agency Fitch
Ratings agency Fitch believes a comprehensive solution to the eurozone crisis is "technically and politically beyond reach."
Fitch said it came to this conclusion after the EU summit on December 9, 10, as it prepares to downgrade Ireland and five other eurozone states.
Managing director Edward Parker, delivering a seminar in Madrid yesterday, said the agency was likely to cut the ratings of six euro nations by the end of this month. Fitch, the third-largest rating agency, placed Belgium, Cyprus, Ireland, Italy, Slovenia and Spain on "negative" watch in mid-December, after the summit.
Mr Parker expressed doubts about Spain's ability to reach its deficit targets for this year and next after overshooting its projected shortfall last year.
He said that Spain's 2011 deficit of 8pc of GDP created doubts about its capacity to hit budget targets for 2012 and 2013.
In July, Moody's cut Ireland's credit rating to junk status. The agency is due to review its credit ratings for all EU nations in the first quarter of this year. Ireland escaped a downgrade by the US ratings agency Standard & Poor's last week, when it downgraded a swathe of European countries, including France and Austria, which lost their triple-A rating.
However, S&P warned there was at least a one-in-three chance that the current Irish rating would be lowered this year or next, especially if weaker external demand results in lower economic growth. (Additional reporting Bloomberg)