"S&P downgrades Italy's rating," headlines Italian financial daily Il Sole 24 Ore, following the lowering, without warning, of Italy's rating from A+ to A by the US rating agency. The reasons given by Standard&Poor's are the weak growth forecasts for the Italian economy and the "fragile" coalition led by Silvio Berlusconi. The Prime Minister is beset by new investigations relating to abuse of telephone surveillance and to prostitution combined with the enormous difficulties he is facing in getting approval for an austerity plan already seen as insufficient and he appears incapable of reacting promptly to potential new emergencies, the paper explains.
The downgrade is "a bombshell for the running of our government," notes Il Sole, adding that the loss of political credibility and the hesitations in setting Italy's economic policy saps the management of the economy, whose fundamentals are better than those of many European countries. "We remain in the A zone, which represents a debt still considered solid by investors. But, after this downgrade, how much more difficult and especially more costly, will it be to obtain the liquidity needed to refinance our debts?" the paper questions.
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