By Simon Miller

The European Union itself has put on a downrating watch by Standard & Poor's.

Following its downgrade warning for members of the eurozone and the European Financial Stability Facility on Tuesday, S&P warned that EU's rating could be cut one level to AA+ if it decided to downgrade either France or Germany or both.

"Given the EU's dependency on such revenues from national budgets, and our recent CreditWatch placements on the 'AAA' ratings on Germany and France, among others, we will concurrently review the 'AAA' long-term rating on the EU with the ratings on the eurozone member states," said the ratings agency in a statement.

A rating cut would affect EU-wide bodies such as the European Investment Bank but non-eurozone members such as the UK would be unaffected.

S&P added: "The credit watch on the EU is an expression of our concerns about the potential impact on the future debt service capacity of eurozone sovereigns, and therefore also the EU, in the context of what we view as deepening political, financial, and monetary problems within the eurozone."

The warning will further anger eurozone leaders, coming before the EU summit on Friday which is being presented as being the "last chance saloon".

French politicians had accused S&P of acting in a "political manner" to undermine talks.

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