Notes on European political culture

Junk Europe

In a matter of days Hungary becomes the new princess of Europe, taking over the rotating EU presidency from Belgium. As Reuters reports, Moody’s credit rating agency downgraded Hungarian sovereign debt to near junk status from Baa1 to Baa3. Fitch Rating, (the second of the top-three global credit raters, together with Moody’s and Standard & Poor’s) also signaled it would lower Hungary’s credit rating to the edge of ‘junk debt status’.

According to the BBC, these new assessment come as a consequence of measures taken by the Hungarian Parliament itself–the aim of cutting the deficit in order to put it in line with the EU’s fiscal requirements–will likely have the reverse effect, sending the country on an unsustainable fiscal path.

As if by financial affinity, Hungary will take over the EU presidency from Belgium, who held the rotating post from July 2010 has, its own political challenges The Belgian political blocks have not succeeded in forming a viable and enduring government since 2007. In the latest round, Belgium has been entirely without a government since April, when the most recent coalition collapsed.
As a consequence, Standard & Poor’s, based in the US, lowered its outlook on Belgium’s credit from ‘stable‘ to ‘negative‘ and warned that the credit rating would be further cut within 6 months, if the government crisis were not resolved and measure not taken to address its relatively high public debt.

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