Spain Loses Triple A Rating

Standard & Poor’s have stripped Spain of an A in it’s credit rating, blaming the country’s “structural weaknesses” for the move.  Granted, Spain are now at Double A plus, which as ministers there said isn’t too bad.  Add to that the fact that the country only gained triple A rating in 2004 and the picture is put somewhat more into perspective.

The news made the euro take a slide against the dollar and the yen, and many are concerned about the future of the ailing country.  Is it holding back the stronger economies of the Eurozone?  The ECB cut rates to 2% which many had predicted, and the Zone is bracing itself for tougher times – Germany accepting more stimulus last week and France also due to inject further cash.

Over in the UK, the pound is down against the euro at 1.29 (at the time of going to press) – this on the news of inflation figures which have just been released.  As predicted, it has gone down, which is making some thoughts turn to the government’s hints of quantitative easing last week.  The Bank would gain new powers under this plan, and would have the right to buy assets up to the tune of GBP 50 billion from corporate institutions.  This would inject more cash into high street banks, which would increase lending….and Joe Public would feel more at ease.  This might fight deflation but could cause lack of confidence in our currency elsewhere.  Confidence for our bank customers doesn’t necessarily mean confidence from investors into our pound in light of such drastic measures.

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