The rating was lowered to A from A+, with a negative outlook. S&P said Italy’s net general government debt is the highest among A-rated sovereigns, and the company now expects it to peak later and at a higher level than it previously anticipated. S&P said it lowered its outlook for Italy’s growth to a 0.7 per cent annual average for 2011 to 2014, from a prior projection of 1.3 per cent. “We believe the reduced pace of Italy’s economic activity to date will make the government’s revised fiscal targets difficult to achieve”, it said. Italy follows Spain, Ireland, Portugal, Cyprus and Greece as euro region countries having their credit rating cut this year. Prime Minister Silvio Berlusconi passed a €54 billion austerity package this month that convinced the European Central Bank to buy its bonds after borrowing costs surged to euro era records in August. The plan to balance the budget in 2013 wasn’t enough to sway S&P. “We expect that Italy’s fragile governing coalition and policy differences within parliament will continue to limit the government’s ability to respond decisively to domestic and external macro-economic challenges”, S&P said.
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