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RomeThe first rating agency drew the consequences of the Italian government's fiscal policy. Moody's downgraded the country in debt on Friday night. Long-term liabilities are now rated only "Baa3" after "Baa2" as announced by the credit guards. This places the score just one level above the notorious spam status.
Many investors have recently withdrawn money from Italy because the new government of the 5-star populist movement and the right Lega is planning new debt three times for 2019 compared to their predecessor. Large funds are often not allowed to place money in government bonds if they are clbadified as junks. In the European financial markets, stock prices fell on Friday.
Moody's rating outlook is now "stable". Italy is therefore not threatening further decommissioning. But Fitch has a "negative" vision. This implies a potentially worse rating. The rating agency S & P plans to review its rating at the end of the month. Here, however, the outlook is "stable".
Moody's badysts have said that the change in fiscal policy should lead to a mountain of debt in the coming years is not expected to decline, but above about 130% relative to economic performance. In reality, the EU has an upper limit of 60%. The high level of debt makes Italy vulnerable, according to Moody's.
The new government wants to invest more to give more impetus to the third economy of the euro area. Tax cuts and a basic income for the poor are planned. "Most increases in public spending are structural, which means that they are hard to reverse," Moody said. Plans can push the economy, but not as much as the government hoped.
Italy is on the road to confronting the European Commission with its budget plans. The latter has just informed the Rome government by letter that the draft budget constitutes a particularly serious violation of the EU rules. The Commission has set Monday the deadline for response.
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