Moody's places Germany on negative outlook

24 July 2012

Concern surrounding the future of the eurozone has resulted in a leading agency downgrading Germany's credit rating outlook, it has emerged.

Moody's Investors Service revealed yesterday (23 July) it had decided to cut its expectations for Europe's foremost economic power from stable to negative amid continuing uncertainty about whether or not Greece can remain in the eurozone.

In addition, the AAA scores of the Netherlands and Luxembourg have also been placed on negative watch, which has heightened speculation that more of the eurozone's leading economies could follow France and Austria by losing their top-notch ratings in the coming months.

Moody's explained that a Greek exit from the economic bloc would "set off a chain of financial sector shocks", which would have a severe adverse impact on the rest of the region.

"Even if such an event is avoided, there is an increasing likelihood that greater collective support for other euro area sovereigns, most notably Spain and Italy, [will be needed]" the body added.

By Asim Shah

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