Kredietbeoordelaar Standard & Poor's wijzigt kredietwaardigheid stad Brussel van 'negatief' naar 'stabiel' (en)
EUOBSERVER / BRUSSELS - Brussels, home to the majority of the EU's institutions, has seen its credit rating outlook cut, just as the European Commission prepares to step up regulation of the agencies that have been criticised for their role in the Greek crisis.
On Tuesday (1 June), rating agency Standard and Poor's revised its outlook for Brussels "to negative from stable," citing the deplorable state of the region's finances.
"The revision reflects likely changes to the size and timing of region's refinancing package," said the agency's credit analyst Bertrand de Dianous.
The recent collapse of the Belgian government means the indebted region is likely to have to wait longer for the country's politicians to agree on a refinancing programme, resulting in a deterioration of its budgetary position in the meantime.
Ironically the move comes just a day before the European Commission is due to strike back in the other direction. On Wednesday, EU commissioner for internal market and financial services Michel Barnier is set to come forward with additional regulatory measures for credit rating agencies (CRAs).
The plans are expected to confirm that one of the new European supervisory agencies - legislation for which is currently being negotiated between member states and the European Parliament - will handle the registration and oversight of CRAs in Europe.
The aim is to have a more centralised supervision of the powerful agencies, together with tougher rules on transparency, following recent criticism of their role in Greece's debt crisis.
Downgrades for Athens, together with a number of other peripheral eurozone administrations, were seen as exacerbating market turmoil in the 16-member area this year.
Large institutional investors such as pension funds frequently decide to buy or sell government bonds based on their rating.
Juncker, unemployment
Luxembourg Prime Minister Jean-Claude Juncker - head of the group of euro area finance ministers - went a step further on Tuesday by calling for the creation of a European ratings agency overseen by the European Central Bank.
"I would wish for a European ratings agency situated close to the European Central Bank, that would be very desirable," Mr Juncker told journalists in Fulda, Germany. "My position toward ratings agencies is very critical."
The veteran politician said it was illogical that CRAs could downgrade countries due to their rising debt levels, but then complain that government-implemented austerity measures were hampering growth.
The ratings debate comes amid the steady flow of bad news for Europe's economy, with fresh unemployment figures on Tuesday showing a record number of European citizens without jobs.
Unemployment in the eurozone rose again in April to a fresh all-time high according to data from the EU's statistics office, Eurostat.
The number without jobs in the 16 nations that use the euro now totals 15.86 million citizens - equivalent to 10.1 percent of the population. Across the EU27, there are now 23.3 million people unemployed, a rate of 9.7 percent.
Spain's jobless level, the highest in the eurozone, has more than doubled since the financial crisis first struck and is now close to 20 percent. Latvia has the EU's highest unemployment rate on 22.5 percent.
At roughly four percent, the Netherlands enjoys the EU's lowest unemployment rate, while Germany is the only country to have seen an improvement in job numbers over the last year.