EU to introduce tougher laws for credit rating agencies

MEPs in Strasbourg are looking at introducing tougher rules to make credit rating agencies more transparent.

When a credit rating agency downgrades a country's credit rating it becomes more expensive for it to borrow and more difficult for it to cut its debts.

The downturn in Europe's economies led to strong criticism of these agencies and the power they wield with some questioning their credibility and transparency.

The Fine Gael MEP Gay Mitchell, who is on the European Parliament's Economic and Monetary Affairs Committee said: "Once we set out a regulation, the requirements are that they must be objective and that they must be consistent across member states.

"Then emotion or psychology or games being played on the markets won't come into account. If someone, for example, looks at Ireland and they see the progress that has been made, you would have to factor that in to any credit rating of the country."