As Spain’s Socialist government presented a fresh round of austerity measures on Thursday, the news was not good.
As expected, the country lost its final top-line AAA credit rating. It was downgraded one level by the Moody’s agency, citing Spain’s weak growth prospects.
Economy Minister Elena Salgado however seemed optimistic that things can and will get better.
She said:“We have left behind two years of recession,” she told reporters. “We are recovering confidence in the Spanish economy and the adoption of tough measures and the beginning of a series of ambitious reforms have been crucial in order to recover that confidence.”
The Zapatero administration’s latest bid to slash the deficit includes tax increases for Spain’s highest earners and a cut in ministerial spending.
Even the Royal Family will have to tighten its belt. Its budget has been reduced for the first time in history.
Public sector cutbacks have already triggered social unrest, notably a general strike that mobilised millions on Wednesday.
Getting Spain back on its feet remains a major challenge.