Even tiniest crisis will rip fragile Europe apart, major credit agency warns
THE European Union could be ripped apart by any ‘small’ crisis in the future as gaping cracks remain in the bloc financial systems, a top ratings agency has warned investors.
By LANA CLEMENTS
Express.co.uk
Thu, May 5, 2016
The question now seems to be “when” will the system break “rather than if”, said Moody’s in a scathing report.
Years of austerity policies have fuelled resentment and disappointment with the project and Europe’s blundering response to the migration crisis has also exposed weaknesses, according the firm.
Coupled with incomplete reforms within the financial system, the EU could break up when faced with even small shocks, said the credit agency.
Moody’s stressed that if Britain votes out of the union in forthcoming referendum, Europe could foreseeably fall apart, as support for anti-EU parties grows elsewhere.
This would dent investor confidence further and put pressure on banks and financial institutions.
The ratings agency pointed out that a Greek exit is another significant risk.
Athens’ debt crisis almost broke up the bloc last summer – and the situation is again flaring up as the government refuses to give in to gruelling austerity demands.
Colin Ellis, Moody’s managing director, chief credit officer EMEA, said: “If the EU survives its current challenges largely unscathed, even a ‘small’ future crisis could threaten the sustainability of current institutional frameworks, if it coincided with negative public sentiment and populist political developments.
“Ultimately, any scenario that leads to even the partial break-up of the Union would have material negative credit implications, albeit ones that may take many years to crystallise.”
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