No plans for EU-backed ratings firm: Barroso

The Portuguese politician said there were questions over the role of ratings agencies in the lead-up to the global financial crisis, but dismissed suggestions the European Union should set up its own assessor.

"We have no intention to create any kind of public ratings agency," Barroso told a lunch function in Sydney.

EU leaders and officials have been highly critical of the agencies that have progressively downgraded weaker eurozone members as the debt crisis has deepened, accusing them of worsening the situation.

European Central Bank executive Jose Manuel Gonzalez-Paramo last month accused the major agencies of "flagrant conflicts of interest", saying it was "possible and desirable" to increase competition in the industry.

The comments followed Standard & Poor's unprecedented downgrade of the United States from its top-flight triple-A rating by one notch to AA+, saying its politicians were increasingly unable to manage the country's huge debt.

The downgrade, which was accompanied by a negative outlook and warnings of further cuts within two years if progress was not made, sent shudders through world markets.

Fellow ratings Moody's and Fitch both maintained their AAA ratings.

Rumours flared of a French credit downgrade over Europe's debt crisis, which started in Greece and is now fuelled by fears Spain or Italy might default, sparking a break up of the 17-nation currency.

Investors are questioning whether France and Germany, the eurozone's two largest economies, can continue to underwrite other states' debts without losing their top credit ratings and falling victim to the crisis themselves.

While the agencies are now criticised for their eagerness to downgrade, they faced derision for giving AAA ratings to mortgage-backed securities in the United States that later went sour and led to the global financial crisis.

Barroso also said he is confident the euro will survive and that the European Union will emerge stronger from the current economic crisis.

Speaking as European markets tumbled on renewed fears over the risk of recession and eurozone debt, Barroso expressed confidence that the fiscal consolidation and structural reform efforts underway would work.

"I think Europe will get out of this crisis stronger because now, in Europe, everybody from the left to the right agrees that we need structural reform to become more competitive," he said.

"We are now making progress, establishing a more integrated euro area, and at the same time, nowadays there is a consensus in Europe about the need to make (the same kinds of) fiscal consolidation and structural reform that are indispensable for our competitors."