Moody’s downgrades Spain’s debt rating
Spain has been dealt a further blow today after Moody’s ratings agency cut the country’s debt by one notch to Aa2 from Aa1.
In a statement, the agency said: “(Moody’s) believes there is a meaningful risk that the eventual cost of the recapitalisation effort could considerably exceed the government’s current projections.”
The downgrade comes just a few days after Moody’s cut Greece’s credit rating further – by three notches from Ba1 to B1 with a negative outlook.
In the meantime, the Spanish Government has introduced tough measures to reduce the country’s budget deficit – which is one of the highest in the euro zone.
Spain is regarded as one of the nation’s weaker economies. It currently has the highest unemployment rate in the industrialised world – at more than 20%.
The country has been hit by a severe slump within its key construction industry, which has led to a significant amount of job losses.
Meanwhile, Spain, which is Europe’s fifth largest economy, is endeavouring to regain investor confidence after speculation mounted that it would be the next country to seek an emergency bailout.
Finally, the latest figures from the National Statistics Institute show that the economy grew by 0.2% in the fourth quarter of last year, but contracted by 0.1% over the whole of 2010.