Moody downgrade fails to impress Berlusconi
Silvio Berlusconi reacted angrily a few weeks ago to S&P’s downgrade of his country’s sovereign debt, but this time Moody’s move came to him as less of a surprise.
Markets, too, were not overly impressed, scarcely moving on the news.
Moody’s downgrade also piled more pressure on the beleaguered eurozone, with the prospect of further downgrades to come for countries like Italy with high public sector debts. The ratings agency blamed a “material increase in long-term funding risks for the euro area”, due to lost confidence in eurozone government debts.
Italy may have low private-sector debts, but its growth prospects are also low. Fitch rating agency cut Italy’s growth forecast to 0.2% from 1.0% for 2012 and down to 0.6% from 1.6% for 2013.
Berlusconi received backing from the European Commission, which said his measures were taking Italy “in the right direction” towards the target of a balanced budget by 2013.