The expected Fitch verdict has arrived. The US rating agency confirmed Italy's BBB score, but revised the outlook downwards from stable to negative. No relegation therefore for the moment to the level of "junk" titles, even if the data comes after a hectic day, which saw yet another surge in the spread, reaching 290 and then falling back to 288 at the end. And it still has a negative value, even if not yet penalizing.
According to Fitch, Italy's public debt will remain “very high”, leaving the Country "most exposed to potential shocks". Among the critical points, American analysts point out "the new and untested nature of the government, the considerable political differences between the coalition partners and the contradictions between the high costs of implementing the commitments made in the 'Contract' and the objective of reducing public debt. It is unclear how these political tensions will be resolved."
[smiling_video id="62799″]
[/smiling_video]
However, for 2018 the new government's policies, Fitch reasons, they will not yet affect the level of the deficit, which should fall to 1,8% of GDP against 2,3% in 2017. However, the deficit/GDP will still not meet the government's forecasts, remaining 0,2 points higher, also because the GDP will grow a little less than expected. In 2019, however, the deficit will reach 2,2% of GDP, and therefore will exceed the EU objectives. And since the debt could exceed 3% due to the various measures put in place by the government, Italy risks an excessive deficit procedure.
However, this does not mean that Italy will leave the EU. Fitch considers this unlikely, despite "the aversion of some parts of the government towards the EU and the euro represent a further risk". "We believe the probability that the government will advance policies that threaten an exit" from Europe or the "creation of a parallel currency" is low, claims the US rating agency.
