Rating downgrade threat could spur euro reform

S&P puts eurozone credit ratings on negative watch days before EU summit

A threat by Standard and Poor’s to slash the credit ratings of a number of eurozone countries, including Germany and France, could help Berlin and Paris muster support for sweeping regulatory changes, Reuters reports. S&P put 15 euro-area economies on negative credit watch on Monday, just days before Friday’s European Union summit, when German Chancellor Angela Merkel and French President Nicholas Sarkozy will urge a change to European rules and advise the implementation of mandatory penalties for countries that exceed deficit targets. S&P also warned that slow growth due to heavy austerity measures might lead to a 40 per cent fall in Eurozone output. Merkel and German Finance Minister Wolfgang Schaeuble have dismissed the downgrade threat as “wildly unfair,” and said it simply represents a wake-up call for leaders to “do their duty” on Dec. 9.