The European financial crisis is heading for a new downturn, with Moody’s downgrading the rating of one of the troubled countries i.e, Iceland, to Negative. The global rating agency has been forced to downgrade Iceland rating from Stable to Negative, only because there is still no clarity on how the European countries are going to bail out the troubled nation.

The downgrade would only make further debt raising by Iceland difficult and also costlier. This could finally result in Iceland going for an International Monetary Fund bailout which could again bring along with it , many harsh financial measures for Iceland public.