Moody's cuts Italy's rating to Baa3 from Baa2, with stable outlook. The decision was in the air and is linked to the interventions that the Government intends to implement in the next financial manoeuvre: the US rating agency in fact considers the new expenses that the Italian Executive puts into "structural" and "difficult to reverse" field. In particular, citizens' income, the relaunch of employment centers and the reform of the Fornero law on pensions ("which puts the sustainability of the social security system at risk in the long run") have come under fire. These three measures alone will cost 0,8 percent of GDP for each of the next three years. While another 0,7 of GDP will be "eaten" by the lack of VAT increase. Finally, increasing public investment will weigh between 0,2 and 0,3 per cent.
The verdict is therefore clear and severe, and brings the judgment on the country's debt to just one notch from the feared "junk" level, which would plunge Italy into an unprecedented crisis of credibility on the markets. Moody's also points out in the note that government plans do not represent a 'coherent reform agenda' that can push “the mediocre performance of growth on a sustained basis”. Indeed, “growth will remain weak in the medium term”. The chances of Italy leaving the euro are currently "very low", but could increase according to Moody's "if the tensions between the Italian government and the European authorities" on the maneuver and on the commitments on budget constraints "were to undergo a further escalation". The Italian government's estimates of growth are "optimistic": the debt "will not concretely decrease in the next few years", remaining stable at around 130% of GDP, concludes the rating agency.
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“Everything as expected”. This is the comment, according to some sources at Palazzo Chigi who reported to ANSA, by the executive on the decision by the Moody's rating agency, which comes after a difficult week, with the spread now steadily above 300 basis points and the Stock Exchange has lost further ground. Within a few days, the majority will have to respond to the letter from the EU, which strongly criticized the contents of the maneuver and the tax decree, effectively anticipating Moody's negative opinion.
