The largest rating agency Standard & Poor's revised its outlook on the European Union rating. Unfortunately, it was lowered to negative from stable. However, the long- and short-term ratings were kept unchanged at AA+ and A-1+, respectively. The main reason for the decrease in the EU rating is downward pressure on the average weighted rating on budgetary contributors to the EU; Great Britain and France are among them. Besides, the situation was aggravated by the repeated use of the EU’s balance sheet to provide higher-risk financing to its member-states, including Greece.
“The EU's financial arrangements are complex. Its liabilities substantially exceed its assets (by €58 billion at year-end 2014),” the S&P’s statement reads. Thus, according to the results of 2014, the EU's outstanding loans and guarantees totaled €84.1 billion, including EURATOM, as well as guarantees for EIB operations of an estimated €24 billion.
Analysts at Standard & Poor's forecast a gradual decline in the EU’s credit activity that is primarily due to the stability of the European mechanisms which are ready to help the EU countries. However, everything depends on the sovereign ratings of the UK and France.
