Standard & Poor's downgrade of Austria is a wake-up call for the country to cut debt and deficits and marks an indictment of Europe's inability to move quickly, Finance Minister Maria Fekter said.

She played down in an interview with Austrian radio the potential impact on Austria's borrowing costs after S&P cut its rating one notch to AA-plus with a negative outlook as part of a sweeping downgrade of euro zone members.

After really all of Europe was affected, our state bond issues will probably be well received, but it is a very clear signal, because we have seen in the criticism just what the problems are, she said in the interview aired on Saturday.

The euro zone is too unstable, and measures in the euro zone are implemented too slowly.

Austria's exposure to struggling neighbours Hungary and Italy also played a role in the downgrade, she said, but noted regulators had already proposed rules to limit banks' risk from emerging Europe, where they are the leading lenders.

At the heart of the downgrade was S&P's critical view of Europe's ability to address its sovereign debt crisis, she said.

It is of course correct. We have a debt crisis of countries in Europe. The verdict that S&P had on Austria says very clearly (it has) a good economy with good performance but state reforms are long in coming and debts are a risk if they keep rising.

S&P said it could cut Austria's rating again if forced bank recapitalisations or an economic slump pushed public debt above 80 percent of gross domestic product. It is around 72 percent now and projected to peak at 75.5 percent next year.

Fekter said Austria did not act quickly enough on a balanced-budget law, which was adopted last year and aims to limit structural deficits to 0.35 percent of GDP by 2017.

The coalition government has struggled to find an opposition party ready to provide the two-thirds parliamentary majority to anchor the law in the constitution, making it harder to reverse.

The centre-left Social Democrats and their conservative coalition partners have also squabbled over what mix of spending cuts and tax increases is needed to improve state finances by around 10 billion euros ($12.7 billion) over five years.

The downgrade is bad news for Austria but it should wake everyone up when such a thing happens. Now everyone recognises that this ... is a matter of debt and deficits, not primarily of the economy, Fekter said.

($1 = 0.7895 euros)

(Reporting by Michael Shields, editing by Jane Baird)