The 'Euro Bridge' sound and light show followed by fireworks introduces the launching of the euro 01 January 2002 on the esplanade of the Cinquentenaire park in Brussels.

Ratings agency Moody's has issued a "negative" annual outlook for sovereign creditworthiness in the euro area for 2020, downgrading the bloc from "stable" this time last year.

The report published Tuesday cited the "deteriorating global environment" and suggested that euro area economies are vulnerable to rising protectionism and geopolitical risks, with their ability to handle economic shocks inhibited.

While the annual report is an update to the markets and not a formal ratings action, it highlighted a number of factors which heighten the risk of investing in the debt of euro area economies in 2020.

Moody's determined that political fragmentation in many countries is hindering reform and will likely slow policy responses to domestic or external shocks, with minority and multiparty coalition governments becoming the new norm and political divergence increasing at the EU level.

"Our negative outlook for the euro area reflects most member states' limited buffers to react to a worsening external environment," said Kathrin Muehlbronner, a Moody's senior vice president and the report's co-author.

"The deteriorating global environment will weigh on growth in member states' open economies in 2020, although resilient domestic demand, easy monetary policy and some fiscal easing will mitigate the impact."