France could be stripped of its triple-A credit rating before Christmas, raising new doubts about the survival of the euro, analysts have predicted.
Standard & Poor's – one of the three top rating agencies – is expected to cut France's rating within days, in a move that would weaken its ability to raise funds on financial markets.
The move would raise doubts over the future of the single currency at a time when questions abound as to whether the deal thrashed out in Brussels represents the breakthrough hoped for in advance of the summit. Andrew Tyrie, chairman of the Commons Treasury select committee, raised the spectre of Greece leaving the eurozone, saying it was unlikely Athens could afford to pay its way if it stayed in the zone. "Few people believe that Greece can remain solvent within the eurozone," he said. "Should Greece have to leave, the recapitalisation of a number of continental banks would be necessary."
David Cameron and George Osborne have stressed that their top priority is for the eurozone to survive the crisis because the consequences of a disorderly breakup would be devastating for the UK as well as the European economies. However, most Tory MPs now doubt that it can survive in its current form. Bill Cash, the veteran Eurosceptic MP, said: "The entire European Union project is unravelling as the euro itself unravels."