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‘Tis the season to be downgraded, Fa-La-La-La-La, La La La La

Ratings agency Fitch has downgraded six of the world’s largest banks, blaming the challenging global financial markets. The banks, including Goldman Sachs in the US, Bank of America, Barclays, BNP Paribas, Credit Suisse and Deutsche Bank, were downgraded on the issuer default ratings which are based on their ability to meet financial commitments on a timely basis and have been affected by their holdings of eurozone debt.

Further developments in the eurozone fiscal pact have emerged, in that the UK has been invited to join talks (along with the 17 eurozone states and the nine other EU states) over what should be in the new fiscal pact, even though the UK has vetoed the treaty. The EU is aiming for the new ‘fiscal compact’ to be ready by early February, but it is still uncertain what key players (such as France and Germany) would want to see written into the agreement. Following the UK’s veto, other member states have become cautious about agreeing to a pact that would see them giving up independent tax policies. It is likely that the UK will hold ‘observer status’, which would allow them to monitor discussions on the projected role of EU institutions – and even have the right to put its view forward. This should go some way to silencing David Cameron’s critics, who had suggested that by vetoing the agreement he had ensured the UK would not have a ‘seat at the table’. Downing Street has confirmed that the Prime Minister “wants the new fiscal agreement to succeed and to find the right way forward that ensures the EU institutions fulfil their role as guardian of the EU treaty on issues such as the single market”.

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