NEW YORK: Standard & Poor’s has changed the outlook for the European Union from stable to negative after the bloc’s support for Greece and following Britain’s decision to vote on leaving the EU, S&P reported on Monday.

The decision means the US ratings agency could lower its grade of the European Union — now at AA+ — in the next two years.

“The EU’s repeated use of its balance sheet to provide higher-risk financing to EU member states (most recently including Greece), without the member states’ paying in capital,” was one reason behind the revised outlook, S&P said.

The agency also said it expected the European bloc would provide first-loss guarantees for lending under the so-called Juncker Plan.

Named for the head of the European Commission, Jean-Claude Juncker, the stimulus plan is expected to roll out 315 billion euros over three years.

S&P’s concern over Britain is due to its outsized role in the 28-member EU.

Published in Dawn, August 5th, 2015

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