Germany downplays downgrades, says France on ‘right track’

KIEL, Germany—germany’s finance minister sought Friday to play down the ratings downgrade of France and Austria, insisting eurozone nations were on the “right path” and warning against overestimating its impact.

“In recent months, we have increasingly come to an understanding worldwide that we should not overestimate the ratings agencies in their assessments,” Schaeuble told television station RTL.

“That there is great uncertainty in the euro countries is not new and of course affects us all,” said the minister, speaking on the sidelines of a local election event in northern Germany.

Later, in the northern German city of Kiel, he said France was “on the right track” despite the downgrade, but added that members of the 17-country eurozone were very closely integrated.

“France is on the right track,” he said, adding: “I think we are all closely connected ... therefore we are not indifferent to this but together we are on the right track.

“We all have to stick to the rules together and strengthen competitiveness and this we have to do all together,” added Schaeuble.

His ministry said later in a statement that it would work with its eurozone partners to re- store the faith of the markets after the downgrades.

By “anchoring concrete fiscal rules in a binding agreement, we will stabilize the public finances of the eurozone’s members, helping to restore and maintain market confidence in a sustainable manner,” it said.

The ministry said the eurozone was equipped to take the steps necessary to slash public debt and win back investors.

“Our determination to strengthen Germany’s public finances and to work towards the resolution of the sovereign debt crisis in the eurozone is beyond doubt,” it said. “The same holds for our partners in the region.” It said that efforts in the last few weeks toward a pact for greater fiscal integration and budget surveillance, which member states hope to have signed by march, had already begun to bear fruit.

“Recent developments have shown that the markets are honoring these efforts,” it said.

The eurozone economy was plunged back into crisis on Friday as France and Austria were stripped of their triple-a credit ratings and talks to agree a Greek debt writedown stalled.

S&P also downgraded Italy by two notches to BBB+, negative outlook, with Spain cut two notches to A, negative outlook, as part of a major overhaul of ratings on 16 of the 17 eurozone nations, with Greece excluded.