Belgium rating cut amid stalemate
BRUSSELS – Standard & Poor’s downgraded Belgium’s financial standing Friday, citing the country’s government stalemate and a looming European recession.
Spurred on by the ratings agency’s cut, six leading parties hurriedly resumed talks to agree on a 2012 budget to contain Belgium’s high debt and deficit, two more reasons why the country has come under increasing pressure from financial markets this week.
In a sign that financial contagion is spreading across Europe, the agency cut Belgium’s credit rating from AA+ to AA, a move coming two days after Germany fared surprisingly poorly at a bond auction.
Belgium has been without a permanent government for 530 days, as a series of negotiators have struggled without success to bridge the country’s divide between its French and Dutch speakers.
“In our opinion, protracted political uncertainty remains a risk to its creditworthiness,” the ratings agency said.
Caretaker Prime Minister Yves Leterme said “we really need strong signals now” from the six political parties trying to resolve the 2012 budget. He said the six parties needed a deal “tonight, the coming days – but preferably before we hit the market again” on Monday.