Ratings agency Standard & Poor’s downgrade of Spain’s credit rating Thursday for the second time this year highlights the fact that austerity alone is not enough to tackle the euro zone debt problem. Experts tell CNBC that European leaders need to focus on growth now.

‘Clearly, austerity and growth cannot go hand in hand… I think we need to see European leaders break out of this pure austerity mode and try and do something different in terms of pro-growth policies,’ Vasu Menon, Vice President, Group Wealth Management, OCBC Bank, told CNBC Asia’s ‘Cash Flow.’

Spain’s long-term debt was cut to Triple-B plus from A, while its short-term rating was lowered to A-2 from A-1. In January, S&P downgraded Spain along with eight other euro zone countries of their coveted triple-A status.

The latest downgrade was prompted by concerns over growing government debt amid a contracting economy. The Bank of Spain said earlier this week that the economy probably contracted 0.4 percent in the first quarter of 2012. Official figures are due April 30.

Austerity measures are beginning to impact European economies as they slip into recession, according to Menon.

‘We can see that it’s starting to impact the economies in Europe, not just in the […]