Eurozone Crisis: Markets To React After Standard & Poor's Credit Warning
The eurozone debt crisis has deepened as Germany, France and 13 other members of the single currency faced having their credit ratings downgraded.
In a move that will pile pressure on eurozone leaders and is likely to hit markets on Tuesday morning, it emerged that ratings agency Standard & Poor's had put all but two euro nations on credit watch.
The only two not named were Cyprus, which was already under review, and Greece, which holds the world's worst rating.
The bombshell came as eurozone leaders frantically tried to prevent the break-up of the single currency and restore stability after weeks of mounting crisis.
After emergency talks in Paris on Monday, French President Nicolas Sarkozy and German Chancellor Angela Merkel renewed calls for EU Treaty change to solve the single currency crisis.
They said they wanted change to be carried out by all 27 member states if possible - or at least the 17 eurozone countries. The aim would be to allow far tougher rules and sanctions governing the eurozone in future to reassure markets about the euro's long-term stability.
The talks marked the start of a week of intense efforts to settle a eurozone stability deal to convince markets once and for all that the single currency can survive the current economic turmoil. The key plan is to toughen eurozone checks and balances - something lawyers say will need treaty change.
The move towards treaty changes prompted fresh difficulties for Prime Minister David Cameron as eurosceptic Tories stepped up calls for a referendum on the European Union.
Downing Street insisted that the scale of the proposal - to be put to an EU summit later this week - did not amount to change warranting a referendum in the UK. However Work and Pensions Secretary Iain Duncan Smith sided with the eurosceptic right in the Tory Party by suggesting that the impact from any treaty change would demand a national vote.
Mr Cameron, who will attend a meeting of the European Council in Brussels later this week, insisted nothing had changed to justify such a move.