February 7, 2017 / 10:31 AM / 6 months ago

EU fragmentation risk low even as political risks rise-Moody's

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LISBON, Feb 7 (Reuters) - The risk of fragmentation of the European Union remains low for now but political risks are on the rise and forthcoming elections in various countries are likely to paralyse policy decisions, Moody's ratings agency said on Tuesday.

Dietmar Hornung, Associate Managing Director for Sovereign Risk told a conference in Lisbon that "something is emerging that needs attention" and Moody's has shifted its assessment of political risk to "low" from "very low".

Still, he saw no return of the euro zone debt crisis.

"The EU is in a post-crisis steady state... overall it's rather stable and balanced... EU fragmentation risk remains low," he said.

With elections due this year in core euro zone countries such as Germany and France, he said: "We're not really concerned about Germany, but we have to watch France and Italy... In France, there's a lot of uncertainty."

Moody's also said that some uncertainties have diminished since Britain's vote to leave the EU last year and the British economy was holding up well, even as the exit was seen as negative for the British economy in the longer run. (Reporting By Andrei Khalip and sergio Goncalves, editing by Axel Bugge)

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