SPAIN is expected to miss its crucial growth targets this year and face more cuts.
The news comes as up to a million protesters marched in 80 cities at the weekend in opposition to further austerity measures.
The mostly peaceful marches led by the 15-M group demanded more jobs and end to political corruption, as well as the stemming of more cuts in benefits.
In Barcelona organisers claimed 250,000 people marched, while in Madrid protesters brought the city to a standstill and seized an empty hotel in the city centre.
In Cordoba and Sevilla marchers focussed on corruption and forced mortgage repossessions, which have become a heated topic in recent weeks.
There were further protests in 951 cities in 82 countries around the world.
Some 5000 protesters blocked access to the European Central Bank in Frankfurt, while 1000 protesters, including Wikileaks leader Julian Assange marched on London’s Stock Market.
But the protests came after two ratings agencies Standard & Poor and Fitch downgraded Spain’s credit rating to AA-minus.
Both agencies believe that the economy will grow well below the predicted 1.3per cent set at the beginning of the year and there are more cuts ahead.
The main issues are poor growth, unstable regional authorities and huge levels of private debt.
Most analysts and the agencies predict 0.8 per cent growth by the end of 2011.
Spain’s finance minister Elena Salgado blamed the downgrade on “global financial tension”.
But a number of analysts also blamed the high spending in Spain’s regions.
“The autonomous regions are to blame,” said IG Markets’ Daniel Pingarron.
The 17 regions, which enjoy financial autonomy, are a recurrent source of concern for the markets because of their high debts and failure to hit deficit targets.
Between them they owe over 133 billion euros, or around 12.4 per cent of the country’s GDP.