Moody’s credit agency has cut Spain’s sovereign rating by two notches due to high levels of debt in the banking and corporate sectors.
The downgrade comes just days after a similar move from Standard and Poor’s.
Moody’s in effect issued a vote of no confidence in Spain and the European Union’s handling of the euro zone’s economic crisis so far.
There were also warnings that the country’s inability to fund its public deficit would be further exacerbated by slow growth. Spain’s real GDP in 2012 is likely to be 1% at best.
This will make budget cuts even more painful for which ever government wins the next general election on November 20.