ITALY: Locals blame Silvio Berlusconi's government for the cut in Italy's sovereign credit rating by Fitch

Record ID: 777508

  • Title: ITALY: Locals blame Silvio Berlusconi's government for the cut in Italy's sovereign credit rating by Fitch
  • Date: 9th October 2011
  • Summary: (SOUNDBITE) (Italian) ROME RESIDENT ARMANDO OGLIAROLO SAYING: "Clearly there is some truth in it (Italy's downgrade), they don't make these kind of evaluations randomly, and our Prime Minister downplays anything happening around him, he says it's not true, but those ratings say something: we are almost on the edge of the cliff." VARIOUS OF PEOPLE CROSSING ROAD (SOUNDBITE) (Italian) ROME RESIDENT GONSALVO D'ANTONIO SAYING: "He (Italian Prime Minister Silvio Berlusconi) must resign with all his government, because they got us into a miserable situation, truly miserable."
  • Embargoed: 24th October 2011 13:00
  • Keywords:
  • Location: Italy, Italy
  • Country: Italy
  • Topics: Economy,Politics
  • Reuters ID: LVAAHTBPEHX1MCKIICUNF39PMM9
  • Story Text: Italians on Saturday (October 8) read in newspapers that Fitch had cut Italy's sovereign credit rating by one notch, citing a worsening of the euro zone debt crisis and a risk of fiscal slippage in the country.
    Fitch is the third ratings agency to downgrade Italy in recent weeks following similar moves by Standard & Poor's and Moody's, saying market confidence in Italy had been eroded by the government's initially hesitant response to the rise in yields.
    The agency also cut Spain's rating by two notches.
    The cuts underline the growing vulnerability of the euro zone, which is already struggling to contain the turmoil in the far smaller Greek economy and which would be overwhelmed by a crisis of a similar scale in Italy.
    Fitch cut Italy's rating to A+ from AA- and lowered Spain to AA- from AA+.
    It kept both countries, respectively the third and fourth largest in the euro zone, on a negative outlook suggesting further downgrades could come in future.
    Italy and Spain are embroiled in the region's debt crisis and are reliant on the European Central Bank to buy their government bonds to prevent yields rising to unsustainable levels.
    Fitch's rating for Italy is now at the same level as it rates Malta and Slovakia.
    "Clearly there is some truth in it (Italy's downgrade), they don't make these kind of evaluations randomly, and our Prime Minister (Silvio Berlusconi) downplays anything happening around him", said Rome resident Armando Ogliarolo. "He says it's not true, but those ratings say something: we are almost on the edge of the cliff," he said.
    After remaining on the fringes of the euro zone crisis until the summer, Italian benchmark 10-year bonds now yield around 5.5 percent, in a sign of markets' increasing unease about Italy.
    Some analysts say the downgrade should be seen as further pressure on the government to adopt growth enhancing structural reforms which were lacking from a recently approved austerity plan aimed at balancing the budget in 2013.
    Berlusconi's scandal-hit government plans to present a package of measures to help growth later this month but his coalition is so weak and divided that few analysts have any confidence in its ability to adopt the deep reforms required.
    "He (Berlusconi) must resign with all his government, because they got us into a miserable situation, truly miserable", said Rome resident Gonsalvo D'Antonio.
    Rome resident Luisa Focacci wanted to know more about the way ratings were established. "We should see who actually supports those agencies, which are the criteria that define a triple A or a double A, and so on", she said.
    Berlusconi was out of the country when news of the Fitch rating downgrade broke, having flown to Russia to celebrate Prime Minister Vladimir Putin's birthday.
    A statement from the Italian prime minister's office said Fitch's comments were more positive than the other agencies', and Italy's fiscal efforts were widely appreciated.
    Fitch said both Spain and Italy were solvent but pointed to their weakening economic growth prospects and urged Italy, one of the world's most sluggish economies for over a decade, to make "a more radical and sustained economic reform effort."
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