S&P cut the country’s rating to BBB-plus and added a negative outlook, saying it expected the Spanish economy to shrink both this year and next, raising more challenges for the government reports The Telegraph.
Esther Barranco, a spokeswoman for the Economy Ministry, told Reuters: “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.”
S&P also said that eurozone-wide polices were failing to boost confidence and stabilize capital flows, and that the region needed to find ways to directly support banks so that governments were not forced to take on those burdens themselves.
“We believe that the Kingdom of Spain’s budget trajectory will likely deteriorate against a background of economic contraction in contrast with our previous projections,” it said in a statement.
“At the same time, we see an increasing likelihood that Spain’s government will need to provide further fiscal support to the banking sector.”