Adam Lent
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.
Trackback made by Tweets that mention Spain’s credit rating cut | ToUChstone blog: A public policy blog from the TUC -- Topsy.com on May 28th 2010 at 11:04 pm:
[...] This post was mentioned on Twitter by John, ToUChstone blog. ToUChstone blog said: Spain’s credit rating cut http://bit.ly/9JgAdz [...]
Trackback made by Spain’s credit rating problem could be ours next | Liberal Conspiracy on May 30th 2010 at 8:22 am:
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Trackback made by The Economic Consequences of Mr. Hugh | afoe | A Fistful of Euros | European Opinion on May 30th 2010 at 2:52 pm:
[...] meanwhile, thinks that Spain’s creditworthiness is adversely affected by its plans for internal devaluati…, but I am on record as saying that anyone whose investment decisions were guided by credit rating [...]