S&P cuts Italy’s credit rating, outlook stays negative

Could this be putting pressure on the Italy finance ? I believe this could start another Euro crisis?

My blog on -Could Italy be next for EU bailout ? Strike 2 in new credit crunch .

S&P cuts Italy's credit rating, outlook stays negative.

Standard & Poor’s announced yesterday that it lowered Italy’s credit rating to BBB, only two levels above junk, on the back of expectations of weakening economic prospects and the nation’s impaired financial system.

In a statement late yesterday, S&P analysts said that even with unprecedented easing by the European Central Bank, real interest rates for non-financial companies in Italy exceeded the level before the financial crisis.

S&P said, “The rating action reflects our view of a further worsening of Italy’s economic prospects coming on top of a decade of real growth averaging minus 0.04 percent. The low growth stems in large part from rigidities in Italy’s labor and product markets”.

Moreover, the austerity measures had continued to deepen the Italy’s economic slump, even if they briefly enabled Italy to reduce its deficit to within European Union limits.

The Italian economy is headed for its eighth quarter of contraction and joblessness, the highest since at least 1977.

However, Economist Roberto Perli assured that, “This is still two steps away from junk, so that’s reassuring…I can see some short-term volatility but not a lot more than that

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