DUBLIN ? Alarming financial news flowed out of Europe in a torrent Friday, just a week after the EU leaders struck a deal they thought would contain the continent's debt crisis.
The bombardment shredded hopes of a lasting solution to the turmoil that is endangering the euro ? the currency used by 17 European nations ? and threatening the entire global economy.
In quick succession:
? The Fitch Ratings agency announced it was considering further cuts to the credit scores of six eurozone nations ? heavyweights Italy and Spain, as well as Belgium, Cyprus, Ireland and Slovenia. It said all six could face downgrades of one or two notches.
? Ireland's economy shrunk again much deeper than had been expected, with its third-quarter gross domestic product falling 1.9 percent. Ireland is one of three eurozone nations kept solvent only by an international bailout.
? Bankers and hedge funds were balking in talks about forgiving 50 percent of Greece's massive debts, a key issue in the debate over Greece's second rescue bailout.
? The red ink in Spain's regional governments surged 22 percent in the last year, endangering the central government's efforts to avoid being the next country priced out of international bond markets.
On the positive side, Fitch said EU powerhouse France should keep its top AAA credit rating and Italian lawmakers overwhelmingly passed Premier Mario Monti's new austerity package in a confidence vote, even though many still objected to its pension reforms.
French officials and investors had feared that France could get downgraded, which would have immediate repercussions for the entire eurozone. France and Germany's AAA credit ratings underpin the rating for the eurozone's bailout fund.
European Union leaders confirmed Friday they have distributed the text of their proposed new budget-stability treaty, a pact designed to deter runaway deficits and supposed to become EU law by March. But as growth prospects fade across the continent, governments are facing the likelihood that Europe's debt crisis will prove longer and tougher to overcome than even their most recently revised forecasts.
Until this week, EU leaders held up Ireland as the model for how a debt-struck nation should behave ? defying economic gravity by simultaneously growing its economy while sucking billions out of that same economy in Europe's longest austerity drive.
But on Friday, Ireland announced its third-quarter gross domestic product fell 1.9 percent, its national product 2.2 percent. Economists had expected only an 0.5 percent fall for GDP and none at all for GNP. The latter figure is considered a better measure of Ireland's economic vitality because it excludes the largely exported profits of about 600 American companies based in the country.
Ireland has been cutting spending and hiking taxes since late 2008 and has plans to keep doing so through 2015. Next year's target is euro2.2 billion ($2.87 billion) in cuts and euro1.6 billion ($2.09 billion) in extra charges, including a hike in national sales tax to 23 percent and introduction of a new euro100 ($131) tax on every property.
But the country's finances this year are seriously out of whack: It is spending euro57 billion ($74.5 billion), including euro10 billion ($13 billion) to keep its five nationalized banks afloat, but collecting just euro34 billion ($44 billion) in taxes.
Labor union leaders say the unexpected slump confirmed Friday is irrefutable evidence that Ireland's 4.5 million citizens already have been squeezed too much, too quickly.
"Current policies are making recovery almost impossible," said David Begg, general secretary of the Irish Congress of Trade Unions, which represents about a third of Ireland's 2 million-strong work force.
"No economy can sustain the sort of ongoing damage that is being inflicted on us," Begg said. "The latest figures show, yet again, a big drop in domestic demand while retailers warn of more closures in the new year. We need growth and we need it quickly."
Ireland's year-old international bailout requires the Irish to reduce their annual deficits from an EU record 32 percent of GDP in 2010 to the traditional eurozone limit of 3 percent by 2015.
Analysts from the left and right agree that Ireland cannot hope to meet the 2015 goal if its economy doesn't grow sufficiently. Ireland's recovery plan now presumes 1.6 percent growth in 2012 and 2.8 percent growth in each of the next three years ? figures many consider way too optimistic.
Alan McQuaid, chief economist at Bloxham Stockbrokers in Dublin, said Ireland would "do well" to reach 0.5 percent growth this year "given the deteriorating world economic backdrop and the fall-off in global demand." He said he doubted Ireland could top 1 percent growth next year.
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