S & P cut the ratings of Italy. A step to become “junk … – The Republic

MILAN – Standard & amp; Poor’s unforgiving Italy. It lowers the judgment on the country, sending him to a step from hell. The rating agency cut the credit rating of BBB with a negative outlook to BBB- with a stable outlook. “We noticed that Renzi has made some progress with its Jobs Act “, but “we do not believe that the measures envisaged will create jobs in the short term. As a result, the already high unemployment rate could worsen until that will not come a sustainable economic recovery. “

” A sharp increase in the debt, accompanied by a perennially weak growth and low competitiveness, is not compatible with a BBB rating, according to our criteria, “he reports the agency. According to S & amp; P, in the medium-term measures in the workplace will create employment growth only after the implementation of the decrees, but may be “softened” in light of a growing opposition. “

” In conclusion – the note continues – the positive or neutral we have described are outweighed by the applicant weakness we see in the real GDP and nominal Italian and in its competitiveness compromised. “At the risk the Sustainability of public finances.” The ratings – analysts say – also reflect our view that the government is gradually moving towards the start of some important reforms. “But the agency currently does not trust and also cuts growth estimates.

Cut the estimates and rising debt . “Since our last report in June, we have revised our estimates average growth in real GDP and nominal for the period 2014-2017 to 0.5% and 1.2% respectively from previous estimates of 1% and 1.9%. ” “We expect – in addition – that the Italian economy comes out of recession at the beginning of 2015, although we expect only a modest recovery of about 0.2%, which compares with our previous estimates of an increase of 1.1 % for next year. ” As observed by S & amp; P, the government plans instead an average growth of real and nominal GDP between 2014 and 2017, respectively, 0.7% and 1.9%. Even the Italian public debt is worse: revised estimates of last June 6. Now the rating agency expects an imbalance at the end of 2017 amounted to 2.256 billion, 80 billion more, at 4.9% of our GDP in 2014.

Consumption weak. “Compared to the forecasts of the government – said S & amp; P – we see a weaker recovery in consumer spending.” According to the agency, the consumption will be kept under pressure from weak conditions of the labor market, where unemployment and historically high level, as well as the gradual fiscal consolidation. At the same time, we expect investment activities remain subdued due to the uncertainty of the outlook on demand, including the prospects of weaker economic growth in major trading partners in Europe, as well as a monetary transmission mechanism in difficulty that prevents a rapid improvement in credit conditions.

Start the measures to support growth. The stable outlook assigned by the rating agency, improved compared to the previous negative outlook “reflects the expectation that the government will apply a gradual structural reforms and budget organic and potentially to support growth.” S & amp; P explains that sull’outlook also affects the belief that “household accounts will remain strong enough to absorb further increases in public debt.” The agency also believes that “the monetary policy of the European Central Bank will continue to support a normalization of inflation in Italy and its partners in the eurozone.”

Sources Government: not rejection. The ‘downgrading’ of Italy by S & amp; P is not a rejection of the Jobs Act and in essence calls for accelerating reforms. They do point out sources of government after the agency cut the rating of Italy. “What is ‘positive’ is that they see good elements in structural reforms but not enough to offset the increase in debt and awaken the economy in the short,” explain the same sources pointing out that the S & amp; P “is not a failure of the Jobs Act, indeed. They say that the reforms are fine, but you need to go even faster. “

The political reactions. ” Italy downgraded by Standard & amp; Poor’s. Now we are worth a paltry BBB-. Do not ride as he left the now famous summer-autumn of 2011 the crisis, but the president of the Council, Matteo Renzi, and his Minister of Economy and Finance, Pier Carlo Padoan, should be bell’esame a conscience and explain to the country the reasons for these repeated disasters. ” This was stated by Renato Brunetta, chairman of the Members of Forza Italy.