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The ratings agency's threat to downgrade 15 countries all the way up to AAA-rated Germany and France came hard on the heels of a Franco-German initiative to enforce budget discipline across the 17-member zone through EU treaty changes.
President Nicolas Sarkozy and Chancellor Angela Merkel told reporters that their plan included automatic penalties for states that fail to keep deficits under control, and an early launch of a permanent bailout fund for euro states in distress. They said they wanted treaty change to be agreed in March and ratified after France wraps up presidential and legislative elections in June.
French Finance Minister, François Baroin, said it did not take into account Sarkozy and Merkel's announcement. He said France for its part did not plan to expand the austerity measures it already has announced.
S&P told the governments it would conclude its review "as soon as possible" after the summit, making clear that it wanted to see political as well as financial solutions. It highlighted "continuing disagreements among European policy-makers on how to tackle the immediate market confidence crisis and, longer term, how to ensure greater economic, financial and fiscal convergence among eurozone members". In its statement, it said that "... systemic stresses in the eurozone have risen in recent weeks to the extent that they now put downward pressure on the credit standing of the eurozone as a whole.