S&P downgrades Belgium credit rating one notch to AA

Standard & Poor's said Friday it was lowering Belgium's credit rating by one notch to AA, citing concerns about the financial sector, debt consolidation amid slowing growth and the country's political impasse. "The ability of authorities to respond to potential economic pressures from inside and outside of Belgium... in our opinion is constrained by the repeated failure of attempts to form a new government," S&P said in a statement. Belgium has been left with just a caretaker government for more than 500 days as its political parties bicker over forming a workable coalition. The ratings agency also cited risks of setbacks in efforts to cut the public deficit "stemming from an increasing likelihood we see that economic growth will slow, given the deleveraging of the European financial sector." Market turmoil also threatens the Belgian financials sector and raises "the likelihood that the sector will require more sovereign support." It noted the bailout of French-Belgian bank Dexia had largely cancelled out progress on cutting the deficit this year.