Spain's Credit Outlook Downgraded

The Standard & Poor credit rating agency have further downgraded Spain’s credit outlook rating from “stable” to “negative”. The agency reported how Spain faced a deeper deterioration in public finances and a longer period of economic weakness than had been previously expected.

The news worried European markets, which were already concerned by Tuesday's decision by another ratings agency, Fitch, to downgrade the credit outlook for the country of Greece.

The effect was felt in the stock markets in London, Paris and Frankfurt which all closed lower.

Standard & Poor released a statement saying how "Reducing Spain's sizable fiscal and economic imbalances requires strong policy actions, which have not yet materialised" - this is despite the government recently launching a programme of public works in a bid to keep unemployment under the 20% mark. A spokesperson for the Spanish Ministry of Economy replied saying "We don't agree with this decision".

Spain's debt is expected to reach 67% of gross domestic product during 2010, according to S&P, compared to a 125% forecast for Greece.