ITALY HAS SEEN its credit rating downgraded by Standard and Poor’s amid concerns over its economic future.
The agency yesterday dropped Italy’s rating by one notch, from A+ to A. It also said the outlook for the country is negative, meaning further downgrades may be coming down the line.
Standard and Poor’s cited “weakening economic growth prospects” as the reason for the downgrade, the Financial Times reports. Italy has seen its financial situation become increasingly parlous in recent weeks, with the ECB forced to step in and buy sovereign bonds in a bid to hold down spiralling interest rates as market confidence in the country dissipated.
A finger was also pointed at prime minister Silvio Berlusconi’s embattled administration, with Standard and Poor’s picking out the country’s “fragile governing coalition” as another reason for its fears. It’s thought Berlusconi’s political problems – he has faced repeated calls to resign amid a string of sex scandals that shows no sign of stopping – will limit the government’s ability to make swift decisions on the crisis.
According to Business Week, S&P said Italy has the highest government debt among countries currently rated A. The Wall Street Journal reports that the country’s current debt is greater than that of Ireland, Greece, Spain and Portugal combined.
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