EU economy chief regrets S&P's 'inconsistent' decision

(BRUSSELS) - European Economic Affairs Commissioner Olli Rehn criticised Standard & Poor's decision to downgrade nine eurozone nations as "inconsistent" on Friday.

"I regret the inconsistent decision ... by Standard and Poor's concerning the rating of several euro area Member States at a time when the euro area is taking decisive action in all fronts of its crisis response," Rehn said in a statement.

"These initiatives push forward the necessary fiscal consolidation and structural reform in our Member States, address the fragilities of the banking sector, reinforce our financial backstops and strengthen our economic governance," he said.

Rehn said decisions taken by the European Union, combined with action taken by the European Central Bank, "have been instrumental in easing tensions in sovereign bonds markets."

He said it was important for governments to quickly finalise the contours of the European Stability Mechanism, the eurozone's future permanent bailout fund that EU leaders have decided to bring forward by one year to July 2012.

The ESM will succeed the European Financial Stability Facility (EFSF), a temporary fund used to bail out Ireland and Portugal after the May 2010 Greece rescue but which is deemed too small to save bigger economies like Spain and Italy.

The ESM, Rehn said, will have its own capital base "and thus will be less vulnerable to changes in ratings of its Member States."

Rehn called for the financial firewalls to be reinforced "both in the scope of their activities ... and in (their) firepower."