Typical News Day in Europe
January 13, 2012
Italy, under the new leadership of Prime Minister Mario Monti, has voiced support for the introduction of taxes on European financial transactions.
French Budget Minister and government spokesman Valérie Pécresse recently confirmed that plans to reform the financing of the welfare system in France will inevitably lead to an increase in value-added tax (VAT).
Ratings agency Standard & Poor’s is set to announce later Friday that it has cut France’s coveted triple-A rating, undermining euro-zone efforts to solve a persistent sovereign-debt crisis, according to media reports. French news agency Agence France Presse, citing an unnamed government source, reported on its website that S&P had already informed the French government of the move. Neither the ratings agency nor the French Finance Ministry would comment, AFP reported. Austria was also set to be downgraded, but fellow euro-zone countries Germany and the Netherlands reportedly were not to be downgraded.
Why’s Austria getting downgraded? Not sure, but on Wednesday this happened:
Following the first ministerial council meeting of 2012, Austria’s Chancellor and leader of the Social Democrats (SPÖ) Werner Faymann underlined the importance of a stable eurozone and of generating new revenues in Austria as part of the government’s planned national consolidation package. The Chancellor also stressed the importance of introducing a financial transactions tax, championed by France and Germany.
Faymann recently referred to a package without wealth taxes as “unthinkable”, alluding explicitly to a tax on capital gains derived from property sales.
Standard & Poor’s late Friday stripped France and Austria of their triple-A ratings and also downgraded Spain, Italy, and Portugal. France and Austria are now both rated AA+ while Spain is at A and Italy is rated BBB+. Meanwhile, Portugal’s rating was slashed to a junk grade of BB. The move had been anticipated after the ratings agency placed 15 euro-zone countries on CreditWatch negative in early December.
Follow William McBride on Twitter @EconoWill