S&P warns NZ and downgrades outlook; Irish crisis worsens with political instability; Aussie food fears
David Chaston details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news Standard & Poor's has changed the outlook on our AA+ sovereign credit rating to 'negative' from 'stable'.
S&P are warning that New Zealand needs to tackle its growing government deficit in the light of softening international prospects.
PM John Key says the revised view by S&P is more about how S&P looks at the world given the Greek and Irish problems, than about New Zealand specifically.
The change in outlook was unexpected, and snapped a rally in the NZ$; the currency dropped a US cent on the news, although it has stabilised at about 77 US cents overnight.
The news in Ireland gets worse; their coalition government looks shaky after the Green Party threatened to walk and call for new elections. A new government there could unstitch the rescue package just negotiated. That rescue could cost the EU almost 100 billion euros, similar to the Greek bailout.
Moodys advised Ireland could suffer a multi-notch rating downgrade from Aa2 (AA equiv), because the rescue package would crystalise huge bank contingent liabilities on to the Government balance sheet, increasing the Irish debt burden.
At the same time, Portugal is coming under intense pressure. And worries mount about Spain.
But its not all gloom in Europe; BMW is cutting its plans for a Christmas shutdown as demand surges for its cars.
In Australia, there are food fears and new calls to limit the ownership of rural land, and food production.
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