Italy's credit rating cut by Standard&Poor

Italy’s credit rating cut by Standard&Poor

Newsroom 20/09/2011 | 16:23

Standard&Poor’s cut Italy’s long and short term sovereign credit rating today, from A+ to A, respectively from A-1+ to A-1. The agency cited Italy’s weakening economic growth prospects and the slow reaction of the current political coalition on the challenging domestic and external macroeconomic environment.

S&P predicts a further drop in the Italian economy, as the government will start implementing a harsh austerity plan, in addition to increased funding costs for the public and private sector, and a decrease in exports.

“The assessments by Standard & Poor’s seem dictated more by newspaper stories than by reality and appear to be negatively influenced by political considerations”, said Silvio Berlusoni, the Italian PM, quoted by Reuters newswire.

S&P also projects that Italy’s ambitious EUR 60 billion austerity plan will fail as the country faces weak growth prospects, high taxation levels and anticipated rises in the market interest rates.

Moody’s, another rating agency, is keeping Italy under review for another month, but a downgrade is imminent.