**Portugal’s credit rating has been downgraded by leading credit rating agency Fitch.**Concerns about the country’s high levels of debt led the agency to drop the rating from AA to AA-.
Earlier this month, Portugal passed an austerity budget aimed at cutting its deficit to the level permitted for countries using the euro currency.
The Portugal downgrade heightens concerns about the health of some of Europe’s heavily indebted economies.
“The downgrade has more impact on the wider sovereign debt crisis, rather than on Portugal at the moment,” said Peter Chatwell at Credit Agricole.
However, the downgrade could mean Portugal has to pay higher yields on government bonds to attract investors, making it more expensive for the country to borrow money - even though other leading ratings agencies may not necessarily follow Fitch’s lead.
There have been widespread concerns about the high levels of debt of a number of European countries, most notably Greece.
At the end of last year, Fitch and Standard & Poor’s, the second of the three major international credit ratings agencies, downgraded Greek government debt.