France and Germany under the cosh amid bailout boost
France and Germany came under pressure today as markets braced for slashed credit ratings across Europe and ministers held talks over a 200 billion (£168 billion) boost to the region's bailout funds.
Europe's twin economic powerhouses saw their benchmark cost of borrowing rise ahead of the conference to thrash out details of plans to bolster the pot through loans to the IMF, which leaders agreed at the Brussels summit this month.
The talks to put more flesh on the tougher fiscal rules also agreed in Brussels come after ratings agency Fitch declared a solution to the region's woes "technically and politically beyond reach".
Fitch, which lowered France's ratings outlook on Friday, said "more active and explicit commitment from the European Central Bank" was needed to avert a future crisis.
Ratings agencies are sharpening the knife after Moody's downgraded Belgium last week, while Standard & Poor's is also set to announce its verdict on the 15 sovereigns which it has on a negative ratings outlook.
But ECB president Mario Draghi played down the chances of Europe's central bank stepping up its purchases of sovereign debt. "The important thing is to restore the trust of the people...We won't achieve that by destroying the credibility of the ECB."
