The eurozone needed a French downgrade like a hole in the head What is more, the French downgrade will inevitably jeopardise the triple A rating currently assigned to the main eurozone bailout fund, the European Financial Stability Facility, making it more difficult for the fund to raise money. This in turn reduces the firepower it's got to backstop Italy and Spain. The downgrade thus risks setting off a chain reaction of deteriorating credit quality. Already, France has to pay considerably more for its government borrowing than the UK, prompting some French politicians to accuse markets and the rating agencies they follow of anglo-saxon bias. Markets have been further unnerved by the possibility of a socialist win in next May's French presidential elections, which might jeopardise support for the fiscal austerity Berlin has been trying to impose on member states. Continued German support for the single currency would evaporate in the absence of such disciplines. Combined with news that Greek debt talks have stalled, making disorderly Greek default more likely, the French downgrade has added to the impression that the euro crisis is entering a new, and possibly even more dangerous phase. Debt dynamics have been further undermined by fast deteriorating economic conditions, which have only added to the pain and difficulty of fiscal consolidation. Inevitable and predictable though it might have been, the single currency needed a downgrade to one of its two core members like a hole in the head. Now it's got one.