Fitch says comprehensive euro zone deal ‘beyond reach’

ROME/BERLIN — Credit rating agency Fitch told the euro zone on Friday it thinks a comprehensive solution to the bloc’s debt crisis is beyond reach, as it put an number of the bloc’s economies including Italy on watch for potential downgrades.

It reaffirmed France’s top-notch triple-A rating but even here said the outlook was now negative over a longer term.

Underscoring the tensions within the bloc over the crisis that has spread relentlessly over the past two years, Italy’s prime minister earlier urged European policymakers to beware of dividing the continent with their efforts to fight its debt crisis, warning against a “short-term hunger for rigor” in some countries, in a swipe at Germany.

Germany has led resistance to allowing the European Central Bank to ramp up its buying of government bonds on the open market to a big enough scale to douse the crisis.

Fitch said that following the EU summit a week ago it had concluded that “a ‘comprehensive solution’ to the eurozone crisis is technically and politically beyond reach.

“Of particular concern is the absence of a credible financial backstop. In Fitch’s opinion this requires more active and explicit commitment from the ECB to mitigate the risk of self-fulfilling liquidity crises for potentially illiquid but solvent Euro Area Member States,” Fitch said.

 

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