There is already a good deal of doom and gloom surrounding the Spanish economy at the moment, even before the latest news that the country has lost its A credit rating, downgraded two notches to BBB+. The assessment, made by the Standard & Poor rating service, bases its evaluation on the future ability and willingness of sovereign governments to service their debt obligations.

Whilst there remains a distinct danger that things could get worse, and Spain be downgraded even further, the S&P did at least acknowledge that some of the severe measures taken by the new government, are at least a step in the right direction. They have announced reforms to the labour market, including cutting back on severance pay and restricting inflation-linked salary increases, that it hopes will ease the problem.. Unfortunately, these measures are, in the sort term at least, likely to make things worse rather than better, as Spain’s crippling unemployment continues its truly painful, inexorable rise. Indeed, only today, official figures reveal a figure of some 5.6 million people out of work, some 24.4%, compared to only 7.9% back in April 2007.

One chief economist is quoted as saying “In Spain today, a cycle similar to Greece is starting to develop”…….we sincerely hope not.

There is already a good deal of doom and gloom surrounding the Spanish economy at the moment, even before the latest news that the country has lost its A credit rating, downgraded two notches to BBB+. The assessment, made by the Standard & Poor rating service, bases its evaluation on the future ability and willingness of sovereign governments to service their debt obligations.

Whilst there remains a distinct danger that things could get worse, and Spain be downgraded even further, the S&P did at least acknowledge that some of the severe measures taken by the new government, are at least a step in the right direction. They have announced reforms to the labour market, including cutting back on severance pay and restricting inflation-linked salary increases, that it hopes will ease the problem.. Unfortunately, these measures are, in the sort term at least, likely to make things worse rather than better, as Spain’s crippling unemployment continues its truly painful, inexorable rise. Indeed, only today, official figures reveal a figure of some 5.6 million people out of work, some 24.4%, compared to only 7.9% back in April 2007.

One chief economist is quoted as saying “In Spain today, a cycle similar to Greece is starting to develop”…….we sincerely hope not.