Spain’s credit rating dropped

Ratings agency Standard & Poor have cut its credit rating on Spain by two notches, downgrading it from A to BBB-plus.

The agency cited expectations that Mariano Rajoy’s governments finances will deteriorate further during 2012 due to the contracting economy and the struggling banking sector.

The agency also placed a negative outlook on the country and said the situation in Spain could deteriorate further without intervention from Europe.

“We think risks are rising to fiscal performance and flexibility, and to the sovereign debt burden, particularly in light of the increased contingent liabilities that could materialise on the government’s balance sheet,” S&P said in a statement.

This was the first downgrade since Rajoy’s Partido Popular took office in December 2011.

Spain’s economy ministry said the downgrade did not reflect the impact that planned reforms would have on reactivating the economy which fell into technical recession following two consecutive quarters of contraction.

Speaking to Reuters a spokesperson said “They haven’t taken into consideration the reforms put forward by the Spanish government, which will have a strong impact on Spain’s economic situation.”

The government have already announced 50 billion euros of cuts and reforms, including efforts to support the many banks drowning under bad property loans.

S&P called on euro zone countries to better manage the debt crisis adding that the Spanish outlook could get worse without strong measures being introduced at a European level.

Other ratings agencies also have Spain marked with a negative outlook. Moody’s Investors Service rates Spain as A3 while Fitch Ratings rates the country as A.

Advertisements

3 thoughts on “Spain’s credit rating dropped

  1. DQ

    “The government have already announced 50 billion euros of cuts and reforms, including efforts to support the many banks drowning under bad property loans.”

    oooh yessss! we can ALL see how that helped Amerika!!! Does no one learn from the mistakes and just plain BAD JUDGMENT of other governments??? Bail out the PEOPLE not the banksters and frauds!

    Holy crap Batman…

    DQ 😐

    1. I think half the problem is the way the media portray issues. I was watching UK news this week when they announced they had fallen into recession again. People on the streets were saying they would have to stop spending and tighten the purse strings. I screamed NOOOOOO at the tv! The way to get the economy moving is to start spending, not stop! How do businesses grow and take on staff without any customers? The media have to stop scaremongering.

      1. DQ

        Now THAT is a total fact — fear mongers! And usually the media is owned/controlled by the governments so….

        But you are 100000% right — to fix this we NEED to spend and get out of the vicious circle! Break the fear cycle — and bailing out the banks is NOT the way to do that. Helping the people who WILL spend and keep the economy going IS the way to handle this.

        The governments want to ADD more taxes, or RAISE current taxes and THAT is NOT the way to handle this. Their poor spending habits should not be paid for by the people.

        Honestly, I can’t bear to watch the mainstream news anymore — it’s so much bs…. we have to make the changes — the government will not do it — they won’t or don’t know how.

        😐

Comments are closed.