As much as it pains me to write this story, it is still highly relevant because Standards and Poor’s rating service has downgraded Spain’s Canary Islands today from A+ to AA-, which only demonstrates Spain’s current financial struggle.
This is a massive blow to the region but the credit rater has also warned that the region could suffer further downgrades as it has been flagged with a “creditwatch negative status”. This basically warns of problematic public finances and high unemployment issues stemming from the year 2008 which has worsened over time. From data received in September of this year, unemployment stands at approximately 25% and is predicted to increase over the upcoming year.
The Spanish government has reacted by imposing budget and spending cuts on its regions in an attempt to balance the deficit but its current situation raises concern for the rest of Europe.
Spain is not the only European country under Standard and Poor’s microscope as a further 14 European Union members (including France and Germany) have also received warnings of possible downgrades if improvement cannot be detected.
The Canary Islands, situated off the west coast of Africa, form part of Spain and are frequented by hundreds of thousands of tourists a year due to its mild all year round climate, turquoise waters and tranquil atmosphere. Its main source of revenue is attributed to the tourist industry so this news is particularly worrying from that viewpoint, however, I’m sure its overall popularity, especially among European visitors will raise the islands’ economy and hopefully in the short-term.