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Milan – Already engaged in a showdown with Brussels over its budget, Italy saw the prospect of its debt lowered by Standard & Poor's, Friday in a verdict a little less severe than the degradation of the rating operated by Moody's the week before.
The ruling coalition in Rome, made up of the League (far right) and the 5-star movement (M5S, populist), opted for an anti-austerity budget, forecasting a deficit of 2.4% of GDP in 2019 against 0.8% promised by the previous center-left government.
Brussels rejected Tuesday the draft budget, lambasting "a clear, clear deviation, badumed and, by some, claimed"compared to European rules.
On Friday, the rating agency Standard and Poor's lowered the outlook for Italy's debt rating from stable to negative, without degrading the rating itself, which remains at BBB / A-2.
"The Italian government's economic and fiscal policy weighs on the country's growth prospects"worries S & P, who did not follow his competitor Moody's in lowering the rating.
Moody's had degraded the Italian note of "Baa2" at "Baa3"October 19th, bringing it to the last step in the category"investment", which precedes the speculative category.
– Risk of stifling recovery –
"Government's planned economic and fiscal path has eroded investor confidence", as shown by the increase in yield on good Italian, says the agency, which forecasts for 2019 a higher ratio of budget debt (2.7% of GDP) to that projected by Rome (2.4%) .
"The negative outlook reflects the risk that the government's decision to borrow more not only exacerbates Italy's weak fiscal position but also stifles the nascent recovery of the private sector", says the agency.
A senior EU official told AFP on Friday that "Italy could be the next country to need the ESM", the European Solidarity Mechanism to help countries facing funding crises, such as Greece in the past.
"It's a hypothesis at this point, but it's the reality", he added.
"By proposing a budget largely financed by the deficit, the country has triggered a conflict with both the European Commission and the markets.Fidelity International badysts Andrea Iannelli and Alberto Chiandetti said.
Since mid-May, date of the start of negotiations for the formation of the coalition, the Milan Stock Exchange has lost some 22%. The banking sector, which counts in its portfolio 372 billion euros of Italian sovereign debt, according to the Central Bank, was the most affected, deviating by 37%.
The spread, the closely watched discrepancy between Italian and German borrowing rates, has more than doubled. Friday night, waiting for the opinion of S & P, it closed up very slightly, to 310 points, while the FTSE Mib lost 0.70%.
Markets and the European Commission are worried about the Italian budget because the country is already bending under a huge debt: 2.300 billion euros, or 131% of its GDP, while the European ceiling is set at 60%.
Rome has until 13 November to present a revised budget in Brussels. It exposes itself if not to a "excessive deficit procedure", likely to lead to financial penalties.
– "We continue !"-
The President of the European Central Bank (ECB), Mario Draghi, declared himself "confident"Thursday on the possibility of an agreement.
Brussels refuses a frontal shock. "It is very important that the dialogue continues (…) and I am not the one who will interrupt this dialogue", said the Commissioner for Economic Affairs, Pierre Moscovici.
The two leaders of the coalition parties, Matteo Salvini (League) and Luigi Di Maio (M5S), do not intend to give in any case.
"Rating agencies did not realize the global crisis?", taunted after the decision of S & P Mr. Salvini, who has been hammering for a week his intention not to touch a comma to the draft budget.
They "do not measure the well-being of the citizens of a country, but those who were waiting for S & P to continue rowing against the government had a bad surprise tonight: the note from Italy was confirmed. We continue ! Change is on", welcomed Mr. Di Maio.
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