Belfast Telegraph

Spain debt downgrade threat sparks euro fall

The escalating debt crisis in the eurozone has come under sharp focus again as a key agency warned it may downgrade Spain's credit rating.

The country's mounting debt, financing needs and a lack of faith in its government's ability to tackle the issues prompted Moody's Investors Service to place the Aa1 rating - only just downgraded from AAA in September - on review.

The euro fell against most major currencies amid fears that Spain will be forced to follow in the footsteps of Greece and Ireland and accept a multi-billion pound bailout from the European Union and International Monetary Fund.

But despite problems in the property and banking sectors, the Spanish government has denied it will need any financial assistance.

Economists, most recently including deputy governor at the Bank of England Charles Bean, have raised concerns over the threats sovereign-debt woes in Europe pose to the UK economy. A weakened eurozone could hit the UK's export trade.

Spain is struggling to emerge from nearly two years of recession and has the highest unemployment rate in the eurozone.