Portugal’s debt rating downgraded by Moody’s

Portugal's debt has been downgraded by the credit rating agency Moody's in a development that is likely to renew fears of a European sovereign debt crisis.

Moody's cut Portugal's rating from A1 to A3 on long-term government bonds yesterday and assigned the country a negative outlook, denoting the likelihood of further downgrades.

Four reasons were cited for the change in status, including sluggish economic growth which was predicted to last for "some time" until "structural reforms, especially in the labour market and the justice system, begin to bear fruit".

Moody's also said the "implementation risks" facing the government's austerity plans were a factor in the downgrade. Portugal's socialist minority government is bracing itself for intense political opposition to the new austerity package announced this Friday.

Read a full report at the Daily Telegraph ·