Zapatero….hero or zero?

Fitch downgraded Spain’s credit rating from AAA to AA+ today. Spain has held the top rating at Fitch since 2003, so I suppose we’re left wondering when Fitch was right about Spain….or wrong. (Standard & Poor’s lowered Spain’s ratings to AA on April 28 last.)

Spanish Prime Minister Jose Luis Rodrigues Zapatero has angered traditional allies by cutting public wages and freezing pensions – but still failed to convince investors and lenders that he can sort out the deficit in the face of the soaring cost of borrowing.

Senor Zapatero will struggle to gain support for his stringent 2011 budget plans, given that yesterday’s strictures passed by just the one vote. But Spain’s debt burden as a proportion of GDP was 53% last year, lower than Germany, France and the euro-region average. So let’s not get carried away with the entirely erroneous idea that Britain’s debt/gdp ratio is going to cut much mustard if we dilly-dally on the painful, rock-strewn road towards fiscal solvency.