In a new setback to Eurozone efforts to save their debt-ridden economies, the US credit rating agency (Fitch) Friday stripped Spain off two notches.
Fitch Ratings downgraded Spain from A to AA- citing financing and monetary problems facing members of the single currency bloc.
The revisions on the marked deterioration in the economic outlook and the absence of a credible financial firewall against contagion and self-fulfilling liquidity crises, the agency said.
It added that European leaders “gradualist” approach to tackling the crisis meant that Europe will continue to face episodes of severe financial volatility that would erode government’s ability to repay debt.
It said those fears would be compounded by a shrinking economy, now that many economists expect at least a mild recession.
Earlier this month ratings agency Standard Poor’s (SP) downgraded the debt rating of nine European countries including France and Austria who were stripped of their prized top-notch triple A ratings.