Credit rating agency Standard and Poors downgraded the sovereign credit rating of several eurozone countries, including France. This was more or less in line with expectations, as in December S&P had put 15 of the 17 eurozone countries on negative watch.

Austria, France, Malta, Slovenia and Slovakia were downgraded by one notch. Cyprus, Italy, Portugal and Spain were downgraded by two notches. Cyprus and Portugal are now rated as ‘junk’ by S&P. The remaining countries that still have the coveted triple A rating are Finland, Germany, Luxembourg and the Netherlands.

S&P said the recent measures by the EU “may be insufficient to fully address ongoing systematic stresses in the eurozone”.

In the meantime, Moody’s, another rating agency, confirmed France’s triple A credit rating but said it was still reviewing whether it would maintain its ‘stable’ outlook. The downgrades render German bonds more attractive than ever as a haven from Europe’s debt crisis.

In the UK, the unemployment rate, as measured by the International Labour Organisation, rose more than expected in the three months ending in November, notching up to 8.4% from 8.3% previously. The jobless rate has now reached a 17-year high.

The number of people without a job rose by 118,000 to 2.68 million in the three months to November whereas the number working on a part-time basis – because they could not find a full-time job – reached a record high of 1.31 million.

The data show that labour market conditions in the country are steadily worsening.

On the other side of the Atlantic, US consumer confidence increased in January, rising to its highest level in eight months, as Americans grew more optimistic about their job prospects.

The University of Michigan’s index of consumer confidence rose to 74, up from 69.9 in December. This was also above consensus expectations of 71.5.

This is the fifth consecutive month that the index has increased and indicates that consumer sentiment is progressing steadily after last August’s political stalemate on the debt ceiling that rocked confidence.

This article was compiled by Bank of Valletta plc for general information purposes only.

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