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S&P Lowers Italy Outlook To Negative

First Credit Agricole, now Italy….Maestro: the EUR take down orchestra is reaching the fortissimo cadenza. Next up: the glissando.

Overview

  • In our view Italy’s current growth prospects are weak, and the political commitment for productivity-enhancing reforms appears to be faltering.
  • Potential political gridlock could contribute to fiscal slippage.
  • As a result, we believe Italy’s prospects for reducing its general government debt have diminished.
  • We have therefore revised the rating outlook on Italy to negative, implying a one-in-three chance that the ratings could be lowered within the next 24 months.
  • We have also affirmed the ‘A+/A-1+’ sovereign credit ratings on Italy. (more…)

Greek crisis clouds EU summit

crisisThe fiscal emergency in Greece and the turbulence in debt markets are threatening to overshadow this week’s EU summit on business competitiveness. The problem poses a leadership test for Herman Van Rompuy, the EU’s first permanent president, who called the meeting. Greece’s debt crisis, and the risk of eurozone contagion,  are not on the summit’s official agenda, but leaders fear the impact on financial markets if the summit does not address the worst crisis to strike European monetary union since its launch in 1999.