France 'likely to be downgraded in further recession'

21 October 2011

If another recession strikes France will most likely be downgraded, according to Standard & Poor's (S&P).

A report from the credit rating agency added Spain, Italy, Ireland and Portugal could also expect to see a reduction in this scenario.

The ongoing eurozone crisis - exemplified by the struggles of the Greek government to prevent its country from defaulting - has heighted tension over a double-dip recession.

According to the S&P investigation, the current EU and International Monetary Fund mechanisms for cash distribution would not be enough of a "safety net" if there is a further deterioration of conditions.

"We assume central banks would provide ample liquidity to banks in need to avoid a major crash, although bank ratings would undoubtedly come under pressure," Blaise Ganguin, S&P's chief credit officer was quoted by the Wall Street Journal as saying.

Robert Zoellick, president of the World Bank, recently said the eurozone has no room for error if it wants to get the situation under control.

By Claire Archer

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