Fitch warns eurozone on Greek exit

Credit rating agency Fitch put the whole of the eurozone on notice yesterday that, were Greece to leave the currency bloc as a result of its current crisis, the remaining countries could find their sovereign ratings at risk.

It said it was likely to put all eurozone ratings on negative watch if Greece were to leave, and that those countries which currently have a negative outlook on their ratings would be at most immediate risk of a downgrade. It said those countries were France, Italy, Spain, Cyprus, Ireland, Portugal, Slovenia, and Belgium.

“In the event of Greece leaving [the eurozone], either as a result of the current political crisis or at a later date as the economy fails to stabilise, Fitch would likely place the sovereign ratings of all the remaining euro area member states on Rating Watch Negative as it reassessed the systemic and country-specific implications of a Greek exit,” Fitch said in a statement.

The agency, whose decisions along with those of Moody’s and Standard & Poor’s help set the cost of borrowing by governments, said the extent of any downgrades would depend on how the eurozone reacted to Greece leaving.

“The probability and magnitude... would largely depend on the European policy response and its success in limiting contagion, as well as outlining a credible vision of a reformed [eurozone],” it said. “Nonetheless, the sovereign ratings of all eurozone member states would potentially be at risk.” Greece’s political leaders were making a last push yesterday to avert a new election, which a poll showed would give victory to a radical leftist and doom its second EU bailout.

European leaders say Greece will be ejected from the common currency if it turns its back on the package of tax hikes and wage cuts.



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