S&P upgrades Spain´s long-term debt to BBB+

Spain's gross domestic product will grow fast enough over the coming years to begin stabilising the stock of government debt, so long as the recovery in the labour market continues and deflation risks are kept at bay, Standard&Poor's said.

The announcement will be welcomed by the central government in Madrid, which has come under fire from the opposition due to the rise in public debt despite the improvement in the economy.

Nominal GDP will expand at a rate of about 4% over the next few years, whereas the Spanish Treasury refinances central government and regional debt at an average cost of less than 1%.

As a consequence, the ratings agency lifted its rating on the Kingdom of Spain´s long-term sovereign debt by one notch to BBB+ from BBB beforehand.

S&P said the economy had benefitted from two rounds of labour-market reforms since 2010, which had improved the competitiveness of the export and services sector and from easier financial conditions.

By the end of 2015 exports will represent approximately 34% of Spain´s GDP versus 25% in 2008.

Real GDP growth was forecast at an average of 2.7% over 2015-2017 with the debt to GDP ratio expected to peak in 2015 at 98.4%.