Palma.Standard & Poor's has downgraded Spain's credit rating by a notch to AA-minus, a week after its rival Fitch Ratings sliced the rating by two notches to the same AA-minus level.
Both agencies judged the outlook to be negative, meaning there is a risk of more cuts ahead.
A third rating agency, Moody's Investors Service, will likely downgrade Spain's credit standing by the end of October, as it has been threatening to do since the end of July.
All three give similar reasons: feeble growth, bad finances in the regional governments, a banking sector yet to recover from the 2008 property bubble collapse, as well as massive private debt held by households and businesses.
No-one now believes Spain can achieve the official 2011 economic growth target of 1.3 percent.
Even Finance Minister Elena Salgado has recognised as much, saying that if she was to redo the forecasts today, they would of course be different to those we did before summer. But a month before November 20 general elections, there is no question of cutting the forecast.
Salgado avoided criticising Standard & Poor's in a news conference Friday, but she said the downgrade was above all the result of global financial tension.
Everything points to (growth) being 0.7-0.8 percent, about 60 percent of the target, said IG Markets analyst Daniel Pingarron. The International Monetary Fund, Bank of Spain and Standard and Poor's all predict growth of 0.8 percent.
A major cause of the weak growth is unemployment, at 20.89 percent the highest in the industrialised world in the second quarter, which has depressed consumption, said David Fernandez, analyst at brokerage Tressis.
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