September 20, 2011- The government in Italy responded in anger to Standard & Poor’s Monday night decision to downgrade the European country’s debt. The office of Prime Minister Silvio Berlusconi issued a statement saying the move by the credit rating agency was out of touch with what is reality.
Standard & Poor’s dropped the rating from A+ to A saying the weakening economy in the country and its lack of growth is even more strained by the more than expected level of government debt.
The agency continued on to say the country had a fragile coalition governing and the differences in policy making in Parliament would continue to hinder the government’s ability to respond in a decisive manner to the economic turmoil it faces.
It also doubted the $82 fiscal savings projected by the government would come to fruition because of the weakening in its growth.
The statement from the Prime Minister’s office stated its solid parliamentary majority and said they were preparing ways to increase the growth of the economy and had recently passed measures controlling public spending and increasing taxes.
Italy’s cost of borrowing is three times higher than that of Germany, the European anchor. The downgrade did not hit the European markets as hard as expected as the market instead responded to positive signs in talks about helping Greece while Spain was able to sell additional Treasury bills.