Standard & Poor's cuts Italy's rating to BBB from BBB+, the outlook is negative. The US agency's decision reflects "the effect of a further weakening of growth on the structure and resilience of the Italian economy" and "the failure to transmit the ECB's expansionary monetary policy to the real economy with corporate loan rates remain well above pre-crisis levels» (read the document). What's more: the negative outlook assigned to Italy "indicates that there is at least one chance out of three that the rating may be downgraded again in 2013 or 2014". Now the country is one step away from the rung defined as junk, which is equivalent to an advice not to invest in its debt securities (see the rating scale).
The prospects are worrying, because "the Italian economy will contract by 1,9% this year", Standard & Poor's increases, underlining that Italy's downgrade is linked to a further worsening of the prospects". It is also estimated that the per capita GDP for 2013 will be equal to 25 euros, «below 2007 levels». Furthermore, S&P estimates debt at 129% of GDP at the end of 2013 and that it will not fall "unless the budget surplus, excluding interest payments, approaches 5% of GDP".
And the rating agency explained this further downgrade in detail, pointing the finger at the policies evidently judged too lax in terms of public finances. The text reads that «in 2013 the budget objectives in Italy are potentially at risk due to the different approach in the government coalition» to cover a deficit «the result of the suspension of the IMU and the possible delay of the planned VAT increase». writes the agency demonstrating disagreement with the latest decisions of the Letta government such as the suspension of the Imu on first homes and the halt to the VAT increase by one percentage point originally scheduled for July XNUMX and postponed to October.
Immediate declaration by the Prime Minister, Enrico Letta, who - hearing the news of the downgrade - explained how "Italy remains under special surveillance, because the situation remains complex, those who have not understood it are very mistaken", referring to those – on the government front – he had attacked austerity recipes and hoped for a progressive reduction of the tax burden with the total abolition of the municipal tax on first homes. The prime minister (who privately shared the Treasury's harsh comment on Standard & Poor's with his collaborators) nonetheless reiterated that the government will undertake to remove the IMU, as promised. The issue of hedging remains evident, now more than ever, so as not to end up under the scrutiny of the rating agencies which issue report cards to countries regarding their creditworthiness to repay debt securities to investors (read the rankings of the other countries ).
POLITICS - Renato Schifani, Senate leader of the PDL, also intervenes, expressing his criticism of the rating agency: "As in the case of the International Monetary Fund, it will not be Standard & Poor's decision to prevent the abolition of the IMU on first home and the definitive stop at the plus point of VAT. These are two necessary and indispensable measures to help the recovery. Standard & Poor's is not the Gospel, it has made mistakes on other occasions and it does it again this time».
