The Spanish government says a cut in the country’s credit rating does not take into account how much is being done to rescue the economy.
Standard & Poor’s downgraded Spain by one notch to AA- but the country’s Treasury criticised the move, claiming the agency has not recognised Madrid’s ‘unprecedented structural reforms’.
These reforms, which include unpopular austerity measures, have reduced the deficit, but not by as much as planned. The figure is meant to have fallen to six percent by now, however, it still stands at nine percent.
The Spanish Economy Minister, Elena Salgado, said it was too early to judge the results: “We think the rating agency doesn’t fully appreciate the substance of our reform of the labour market. We think — and we’ve always said — that it’ll take time for these reforms of the labour market to show because they are profound reforms.”
A major concern continues to be Spain’s high unemployment rate which is over 20 per cent and was one of the reasons given for S&P’s downgrade decision.
The agency has also cut its economic growth prediction for Spain for next year from 1.5 per cent to just 1.0 percent.