Greece’s credit rating may be hit by a “multi-notch” downgrade by Moody’s Investors Service if the government doesn’t cut the budget deficit enough or the European Union fails to agree a united response to its crisis.
German and French government bonds rose, pushing yields to record low levels, and securities of so- called peripheral nations such as Spain fell on concern Europe lacks a united response to its debt crisis.
French President Nicolas Sarkozy threatened to pull out of the euro unless German Chancellor Angela Merkel agreed to back the European Union bailout plan at a summit last week in Brussels, El Pais newspaper said.
U.K. unions said strike action is possible if talks with the government over public-sector pensions are unsuccessful as labor leaders met in London to coordinate their response to the government’s spending cuts.
Greece’s three-year emergency aid package worth as much as 120 billion euros ($159 billion) will meet its immediate financing needs and may help the country keep its investment-grade rating, said Brian Coulton, managing director of Fitch Ratings’ sovereign debt team.