Credit ratings agency Moody’s on Tuesday warned that the outlook for Germany’s AAA credit rating is negative, which is said to be the first step towards a possible downgrade. Credit ratings for the Netherlands and Luxembourg were also put on negative outlooks by the agency.
According to the credit ratings agency, the eurozone’s top-rated economies were at risk from wider eurozone troubles and a possible Greek exit from the euro. Moody’s added that there was an increased chance that Greece could leave the eurozone which could “set off a chain of financial sector shocks.” Financial sector shocks are only expected to be able to be contained by policymakers at a very high cost, according to the agency.
The BBC said that a negative outlook posting from Moody’s, which is one of a number of agencies measuring the creditworthiness of borrowers, reflects a higher risk that the actual rating will be cut at some point within the next two years.
Moody’s warned that Germany along with other highly-rated countries may have to increase levels of support for countries such as Spain and Italy, who have not yet asked for a Greek-style bailout but are said to be struggling with high levels of debt.
According to the German Finance Ministry the country will remain strong, and it added that Moody’s was focusing on short-term risks. “By means of its solid economic and financial policy, Germany will retain its ‘safe haven’ status and continue to play its role as the anchor in the euro zone responsibly,” the ministry said.
Other agencies, including Standard & Poor’s and Fitch, currently have Germany on the AAA top rating with a stable outlook, which is said to suggest that they do not currently foresee a weakening of its financial position, although all agencies regularly review their rankings.