Spain’s credit rating cut
The credit rating agency Fitch has just cut Spain’s credit rating from AAA to AA. Have they done this because they think Spain is not getting to grips with its public finances? No. They’ve cut the rating because the Spanish Government’s efforts to reduce their budget deficit through cuts:
will materially reduce the rate of growth of the Spanish economy over the medium term.
This is an important development that blows out of the water claims by European governments, including the UK’s, that cuts are the best way to avoid loss of credibility with the markets. It is a vindication of those who have been pointing out recently that austerity packages will not only damage economic performance but do nothing to calm the markets.