Spain receives credit rating upgrade from S&P

A number of Spain’s best-performing industries, such as winemaking, tourism and the automobile sector, have enjoyed a solid recovery in 2015.

Standard & Poor’s, the world-renowned credit agency, raised Spain’s credit rating to BBB+ at the weekend, which is three levels above junk status and the highest rating the country has enjoyed since the recession.

In May 2014 Spain was upgraded by S&P to BBB, and now – with the country’s outlook rated as ‘stable’ by the agency – the new BBB+ level means Spain is now three levels above non-investment grade…

In other words, the world’s leading economists are no longer concerned about the country’s ability to pay its bills, which is sure to be music to the ears of Spanish businessmen, investors and, not least, the Prime Minister Mariano Rajoy, who will head into December’s general election feeling more confident than ever.

“The upgrade reflects our view of Spain’s strong, balanced economic performance over the past four years, which is gradually benefiting public finances,” an S&P statement said.

Previous reports from S&P have praised Spain’s economic recovery, and many economists are confident that the nation’s GDP will grow by around 2.2% this year, averaging 2.7% between now and 2017.

This is the fastest pace of growth in eight years, and as job creation also improves, the future is starting to look increasingly secure for a nation that was, just a few years ago, staring into an economic abyss similar to that which Greece finds itself mired in currently.

However, the looming election does raise some question marks over future stability, chiefly the issue of whether some of the ruling PP’s more controversial reforms – which economists agree have improved competitiveness – are retained should a new government come into office.

“I’m half surprised by the upgrade,” Geoffrey Minne, an economist at ING Bank in Brussels, told Bloomberg. “This is an election year and the risk now is that reforms are either going to be postponed, or scrapped altogether if the opposition gets to power.”