Bankinter | S&P maintained Spain’s rating at A with a long-term Stable outlook. The agency considers Spain to be one of the fastest growing OECD economies (projecting around +2% over the next four years). The maintenance of the stable outlook was based on the fact that it considers the risks to be balanced over the next two years. Despite this, the rating agency pointed out that public debt and unemployment remain high; it noted the impossibility of approving the General State Budget and, in addition, the pressures to increase defence spending could slow down the pace of budgetary adjustment. Finally, with regard to trade tensions, it considers that Spain is less exposed to the direct effects of tariffs, but could suffer the consequences of lower growth in the Eurozone.
On the other hand, Fitch maintained Portugal’s rating at A- and the outlook at Positive. This decision came as a surprise, as an upward revision was expected. Fitch believes that early elections could hinder the implementation of fiscal adjustments, slow down the execution of the PRR (Recovery and Resilience Plan) and delay certain critical projects.
Likewise, Moody’s raised Greece’s rating to Baa3 from Ba1. It also improved the outlook to Stable from Positive. It considered that there had been a faster than expected improvement in its public finances and that there was political stability. It estimates that GDP will grow at a rate of 2.0%/2.5% in the medium term. Greece is now better prepared to face possible external impacts and has been investing 2.0% of its GDP in Defence for some time now. It makes direct reference to the improvement of the Banking Sector.
Finally, Fitch maintains the rating for France at AA- with a Negative outlook. It considers that its main weaknesses are the high level of indebtedness and fiscal consolidation. It is also affected by political fragmentation. It estimates that the deficit will stand at 5.5% of GDP in 2025, in a context of weak economic growth (0.6% vs. 1.2% initially estimated). In 2026, it estimates that the deficit will stand at 5.6% (GDP 0.9% vs. 1.3% previously). The lower GDP growth estimate is due to the impact of increased protectionism and the weakness of Germany, its main trading partner. This effect could be partially offset by the estimated higher defence spending in the EU, since it accounts for a large part of the industry. In 2027 the deficit will reach 5.4%. As for the debt, it is estimated to exceed 128% of GDP in 2028.