Rating agency Standard & Poor's downgraded the long-term credit ratings of nine European countries on Friday, saying actions taken by the eurozone to contain its debt crisis were likely insufficient, dpa reported.
France and Austria lost their top AAA credit rating, and were downgraded by one notch to AA+. Italy, Spain, Portugal and Cyprus were lowered two levels, while Malta, Slovakia, and Slovenia each fell one level.
Germany, the Netherlands, Finland and Luxembourg hung on to their top AAA ratings. Belgium, Estonia and Ireland also maintained their lower-level credit scores.
The announcement drew sharp criticism from the affected countries and the European Union.
The European Union Economy Commissioner Olli Rehn called the decision "inconsistent" and noted that the rating agency had made mistakes in the past.
"After verifying that it this time is not accidental, I regret the inconsistent decision earlier today by Standard and Poor's concerning the rating of several euro area Member States, at a time when the euro area is taken decisive action in all fronts of its crisis response," he said.
In Vienna, Chancellor Werner Faymann and Vice Chancellor and Foreign Minister Michael Spindelegger called the move "incomprehensible" and noted the country was working on a plan to restructure the budget in the next five years and parliament recently passed a bill to limit spending.
"It is incomprehensible that individual eurozone member countries were evaluated differently, even though they have been working on solutions in close coordination," they said.
The agency said all but two countries - Germany and Slovakia - within the eurozone had negative outlooks for the future, with a one-in-three chance that their ratings could be lowered sometime in the next two years.
Eurozone countries are determined "to do whatever it takes" to beat the debt crisis, the head of Eurogroup, the European single currency's finance ministers' panel, said.
"We take note of the announced decision by Standard and Poor's," Jean-Claude Juncker, who is also Luxembourg's prime minister, said in a statement on behalf of the Eurogroup.
"We reconfirm the inflexible determination of euro area member states to do whatever it takes to overcome the crisis, ensure sound public finances and return to a path of growth and job creation," he added.
French Finance Minister Francois Baroin had confirmed earlier that France had lost its AAA credit rating, saying: "It's not good news."
But he said it was also "not a catastrophe."
"We're headed in the right direction and it's not ratings agencies that are going to dictate French policy," he added, noting that France would not undertake any further austerity plans.
Economists have predicted that stripping France of its top-notch triple-A rating would in turn lead the eurozone's bailout fund, the European Financial Stability Facility (EFSF), to the same fate.
France is the second-largest financial backer of the EFSF, behind Germany. Italy, another downgrade victim, is the third.
Juncker addressed those concerns insisting, "The shareholders of the EFSF affirm their determination to explore the options for maintaining the EFSF's AAA rating."
He also confirmed that the current 500-billion-euro (634-billion-dollar) limit on eurozone bailout facilities - insufficient to shelter the likes of Italy and Spain against rising market risk - "will be reassessed by March 2012."
When S&P put 15 of 17 eurozone nations on notice of a downgrade in December, it said the agreement reached at an EU summit on December 9 had "not produced a breakthrough of sufficient size and scope to fully address the eurozone's financial problems."
Juncker however maintained that EU leaders "took bold and ambitious decisions" at the summit.
The German government also vowed that the planned fiscal compact to reduce state debt would ultimately bring sustained relief.
The Finance Ministry in Berlin said the compact, would bring concrete fiscal rules in a binding treaty. It said this would restore market trust in the eurozone and strengthen it long-term.
"Our will to consolidate and our resoluteness to make our contribution to overcoming the sovereign debt crisis in Europe are unquestionable," the ministry said in a brief statement.
Dealing specifically with France, the agency pointed to its wealthy, resilient economy, but said it was hurt by high government debt and a rigid labour market.
If growth fell below the government's forecast this year and next, the budgetary cuts announced "may be insufficient to meet deficit targets in 2012 and 2013," S&P warned. Increased risks in the eurozone could also affect France's financing.
On Austria, the agency pointed to exposure of Austrian banks as the biggest lenders in Central and Eastern Europe.
Vienna insisted however has already taken measures to ensure that its banks balance credits with savings in that region.
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