S&P cuts Spain's credit rating

Standard & Poor's(S&P) has cut Spain's credit rating two notches to BBB+ and warned of more economic pain to come.

It has also placed Spain on negative outlook, meaning there is a risk of further downgrades. The ratings agency said the country could have to take on more debt to support its banking sector, the BBC reports. S&P predicts the Spanish economy will shrink by 1.5% this year, having previously forecast 0.3% growth. It also expects the economy to contract 0.5% in 2013, having previously predicted 1% growth. The ratings agency criticised Europe's strategy to deal with the crisis: "In our view, the strategy to manage the European sovereign debt crisis continues to lack effectiveness. "...