Standard & Poor's agency has cut the Netherlands' credit rating, thus reducing the euro zone club of full triple-A nations to just three, while rewarding Spain for efforts to reform its public finances.

S&P lowered the Netherlands, which is suffering from an anaemic economy, slumping house prices and falling consumer confidence, to "AA+" from "AAA". This left Germany, Luxembourg and Finland as the only members of the 17-nation euro zone with the top rating from all three leading credit agencies.

However, it raised the outlook for Spanish debt to stable from negative and upgraded bailed-out Cyprus, highlighting diverging fortunes within the common currency bloc.

The fiscally conservative Dutch government has long been an ally of Germany in taking a tough line on the euro zone's "budget sinners" which run large deficits.

Now, S&P has stripped the Netherlands of its coveted top long-term rating to reflect its bleak economic growth prospects, while Spain appears to be finally emerging from the depths of economic despair, albeit slowly.

Dutch Finance Minister Jeroen Dijsselbloem, who heads the Eurogroup of his euro zone peers, said he was disappointed by S&P's decision. However, he said there would be few consequences for the cost of financing the country's debt as interest rates on Dutch state bonds remain very low.

Yields on the 10-year Dutch government bond were 2.02 per cent after the announcement.

Dijsselbloem said the only way for the Netherlands to win back its top rating was to tackle structural weaknesses in the economy with reforms of healthcare and pensions, as well as the labour and housing markets.

The country was pulling out of recession, he said.

"Even though we are moving out of the crisis - we will have growth next year - it's still too low. We have to get higher figures in order to become a triple A country again, which is of course our ambition," he said, adding that the government would not try to stimulate growth by easing off on the budget.

"There is still broad support for quite tight budget discipline, so there is absolutely no reason to loosen the reins where budget discipline is concerned," he said.

S&P said the Dutch decision was due to a worsening of growth prospects. "The real GDP per capita trend growth rate is persistently lower than that of peers at similarly high levels of economic development," S&P said, while affirming the Netherlands' short-term debt rating at A-1+.

A crisis in Italy and Spain has eased over the past six months but Europe is still struggling to achieve the economic growth it needs to bring down unemployment and deal with debt burdens that in some countries are above 100pc of annual national output.

The Dutch, who have consistently stressed the need for budget austerity in the bloc's struggling southern half, have been forced into several rounds of their own cuts to meet the European Union's target of a deficit of 3pc of GDP.

Despite billions of euros of budget cuts, the Netherlands is still expected to exceed the target this year. Last month the Dutch central bank warned that weak bank lending was holding back economic recovery. Consumer demand remained fragile, exacerbated by a property market crisis in which house prices have fallen a fifth since their 2008 peak, and by deep government spending cuts, it said.-Reuters