S and P downgrades EU from 'AAA' to 'AA+'

The Standard and Poor's ratings agency on Friday downgraded the European Union's long-term credit rating one notch, from "AAA" to "AA+", citing weaker credit worthiness among the bloc. "The downgrade... reflects our view of weaker creditworthiness among the 28 EU member states, including among net creditors to the EU's budget," the agency said. "We consider that the EU's financial arrangements have deteriorated, and that cohesion among members has lessened." The outlook was stable, it added. The downgrade came as EU leaders held a summit in Brussels, stumbling on agreeing deeper economic reforms and defence policy after striking a landmark banking union deal. Satisfied with a banking union deal that would result in one of the biggest handovers of sovereignty to the European Union since the creation of the euro currency, leaders meeting in Brussels put off plans for the next step in tighter economic policy coordination until late next year. The 28 nations in the bloc agreed a landmark bank regulation deal in the hours before the two-day summit opened on Thursday. The deal was drawn up after failed banks drove countries such as Ireland into bailouts and brought the continent's economy to a halt. It includes a single body to police and wind up ailing banks, backed by a fund paid for by the banks themselves to avoid using taxpayer money. All 17 countries -- soon to be 18 with Latvia joining next month -- sharing the euro will be bound to the scheme, while non-euro members have the option of joining. The banking union is seen as a means to ensure stability in the eurozone, and proponents also hope it will help facilitate much-needed growth and jobs by getting the banks to lend freely again. With fragile growth of just 1.1 percent and a stubbornly high unemployment rate of 12.2 percent expected for 2014, the eurozone is badly in need of a boost.