Fitch says Italy's credit rating under threat
Political deadlock another problem for weak economy, says agency01 March, 18:00
Of the three big rating agencies, Fitch is the one that gives Italy the highest rating - A-.
It warned that the political situation was an extra problem for an economy that is not forecast to pull out of recession until the second half of this year.
Fitch said that fiscal consolidation will not be sufficient to stabilise the nation's GDP-debt ratio if there is no growth. Moody's said earlier this week that the risk of political gridlock has put the country's credit rating under threat.
"We would consider downgrading Italy's government debt rating in the event of additional material deterioration in the country's economic prospects or difficulties in implementing reform," Moody's said.
"A deterioration in funding conditions as a result of new, substantial domestic economic and financial shocks from the euro area debt crisis would also place downward pressure on Italy's rating." Moody's gave Italy's long-term debt a rating of Baa2, two notches above junk status, in July 2012, when it said there were risks that outgoing Premier Mario Monti's reform and fiscal consolidation policies may not continue.
Another rating agency, Standard & Poor's, said the election outcome would not immediately affect Italy's sovereign rating, while stressing that it could in the future.