For the second time in less than a month, Italians woke up to the news that their country’s credit rating had been cut.
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This time Moody’s downgraded Italy’s government bond rating by three notches to A2 – lower than Estonia.
Last month, Standard and Poor’s cut its rating for Italy.
The latest move displays investors’ concerns about the eurozone’s third-largest economy being dragged into the debt crisis, says Reuters Chief Economics Correspondent, Gavin Jones.
“It means markets are focusing very much on Italy’s weaknesses now, having for a long time being reassured by its relative strength of its financial system. Now they are looking at its political weakness and its inability to grow economically. It’s a bad sign, it’s a sign of a lack of confidence in Italy to solve its problems.”
Prime Minister Silvio Berlusconi’s government has come under pressure recently over how it’s handled the escalating crisis. With low growth and huge public debt, the markets seem to have largely lost confidence in Berlusconi’s ability to lead Italy to recovery.
And some Rome residents agree:
“I think our image in the world is so bad that there’s no way to give any kind of confidence to foreign markets.
“We deserve it, if we continue like this we will end up like Greece and Argentina. It’s time our politicians started waking up.”
Italy’s government said in answer to the downgrade that it’s working to reach its budget objectives.
Italy’s borrowing costs have soared over the past three months and have only been kept under control by the European Central Bank buying its government bonds.
The downgrade comes as fears grow that a possible Greek default could trigger a crisis among the region’s banks.
Bottom line: Italians have woken up to more bad news about their economy, as ratings agency, Moody’s, followed Standard and Poor’s to downgrade Italy’s bond rating over concerns about the country’s lack of growth and huge debt.