Standard & Poor's downgrades European Union's credit rating, stripping it of AAA

PARIS - The Standard & Poor's rating agency says it has downgraded the European Union's credit rating, stripping it of the highest grade of AAA.

The agency said Friday that a bitter battle over the EU budget and worsening creditworthiness of its members are behind the decision to downgrade the bloc's long-term issuer credit rating to AA+. The outlook is stable.

A downgrade can sometimes make it more expensive to borrow money on bond markets. But a rating of AA+ is still considered very solid, so the new rating is likely to have little more than symbolic effect.

The EU borrows money to lend to member states, other countries and some programs. S&P said loans to Ireland and Portugal — which received bailouts — represent 80 per cent of the EU's outstanding loans.