View more on these topics

Fitch downgrades Portugal

Portugal has lost its AA sovereign status by Fitch Ratings due to its economic weaknesses amongst other Eurozone nations.

Portugal has recently been the subject of sovereign bond speculation. It was one of the so-called ’PIGS’ of Europe alongside Spain, Italy and Greece due to its macroeconomic weaknesses but today Fitch took the step of downgrading the nation to AA- from AA.

Fitch sovereign team associate director Douglas Renwick says: “A sizeable fiscal shock against a backdrop of relative macroeconomic and structural weaknesses has reduced Portugal’s creditworthiness. Although Portugal has not been disproportionately affected by the global downturn, prospects for economic recovery are weaker than EU15 peers, which will put pressure on its public finances over the medium term.”

The ratings agency says Portugal’s budget “significantly” underperformed in 2009. It has a deficit of 9.3 per cent of GDP against a prediction of 6.5 per cent deficit in September 2009. Fitch says its gross national debt will reach 90 per cent of GDP by 2013.

Fitch admits that the long-term refinancing needs of Portugal are not high with an average debt stock maturity of 6.5 years.

Renwick says that while the Portuguese government’s recently announced consolidation plans are “broadly credible”, the planned deficit adjustment is “back-loaded and the risk of macroeconomic disappointment is significant”.

He says: “Further fiscal and/or economic underperformance in 2010 and 2011 could lead to another downgrade. Conversely, evidence that Portugal is entering a sustained recovery and that budgetary targets are being met, along with further structural reforms to enhance the productivity and competitiveness of the economy, would ease downward pressure on the rating.”


Julian marr

The clock is ticking

Help is at hand for advisers as the RDR draws closer although the sizable minority still considering leaving the industry need to formulate an exit strategy now


Guide: how to change your auto-enrolment support

As we approach the two-year milestone of auto-enrolment, employers have had the opportunity to truly assess the capabilities of their chosen support. They are also now realising that getting to the staging date was the easy part, and that support is required for almost every aspect of the day to day running of their scheme. With the three-year re-enrolment window coinciding for many with the total removal of commission and Active Member Discounts from pension-related products and services, as well as the introduction of the pension charge cap in April 2015, many employers will have no choice but to review their support options. But, what is involved in transitioning your auto-enrolment scheme away from your current support options? This guide from Johnson Fleming aims to outline some of these key areas and provide information and discussion points on what you need to consider.


News and expert analysis straight to your inbox

Sign up


    Leave a comment