Page last updated at 15:15 GMT, Tuesday, 17 January 2012

Ratings downgrades damaging euro recovery, claims peer

A Labour peer has accused "unaccountable" credit rating agencies of jeopardising the eurozone recovery.

During question time in the Lords on 17 January 2012, Lord Grenfell said it was "extraordinary" that the ratings agencies "disclaim all responsibility" for the impact on borrowing costs of their downgrades.

On 16 January Standard and Poor's downgraded the EU bailout fund, the European Financial Stability Facility, to AA+ from AAA.

The fund's rating is based on the ratings of the countries that guarantee it.

The credit ratings agency also cut its its ratings for France, Italy, Spain, Cyprus, Portugal, Austria, Slovakia, Slovenia and Malta last week.

Raising the issue in the Lords, Lord Grenfell asked: "Do these unaccountable agencies just not care whether or not the impact of what they do is likely to hamper and jeopardize the eurozone recovery?"

Treasury Minister Lord Sasson, responding for the government, said credit rating agencies played a "useful" and "important" part in the good-working of the financial markets.

He pointed to a Lords Committee report on the regulation of the agencies, which raised issues about their performance in respect of the financial crisis.

But, he said, their record in relation to sovereign ratings had been "perfectly acceptable in most people's judgement".

He added that he would not comment on their individual judgements of the last couple of weeks.

SEE ALSO

Story Tools

BBC navigation

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.

Americas Africa Europe Middle East South Asia Asia Pacific