S&P puts European Union on notice

@CNNMoney December 8, 2011: 6:41 AM ET

NEW YORK (CNNMoney) -- Standard & Poor's put the European Union on review for a possible downgrade Wednesday following similar action against 15 members of the euro currency union on Monday.

The U.S.-based rating agency said the decision to put the European Union on review followed naturally from Monday's action against individual countries. Eurozone members directly contributed approximately 62% of the EU's budgeted revenues this year, S&P noted.

S&P's move Wednesday targeted the European Union as an institution and does not have any impact on the credit ratings of EU members that don't use the euro currency, such as the United Kingdom.

Of the 27 countries that are members of the European Union, 17 are part of the eurozone, meaning they use the euro as their currency.

"The CreditWatch on the EU is an expression of our concerns about the potential impact on the future debt service capacity of eurozone sovereigns, and therefore also the EU, in the context of what we view as deepening political, financial, and monetary problems within the eurozone," S&P said in a statement.

Monday's blanket warning applied even to AAA-rated nations such as Germany, France, the Netherlands, Austria, Finland and Luxembourg.

France is already seen as the most likely candidate to be stripped of its AAA status, but the decision to review Germany, the euro area's most creditworthy nation, points to the severity of the crisis. France and Germany alone accounted for 32% of the EU's budgeted revenues for this year, S&P said in Wednesday's announcement.

S&P's moves come ahead of a European Union summit on Thursday and Friday in Brussels focused on resolving the region's debt problems.

While no one knows for certain what will come out of the fourth and final major summit this year aimed at saving the euro, leaders will likely discuss the new fiscal pact cooked up by French President Nicolas Sarkozy and German Chancellor Angela Merkel earlier this week in Paris. To top of page

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