Berlusconi Slams Italy Downgrade

Bad news keeps piling up for Italian Prime Minister Berlusconi who has come under fire over the economy, in the courts and has seen his approval ratings among voters plunge. Photo by EPA/BGNES

Italian Prime Minister Silvio Berlusconi has harshly criticized the downgrading of his country's debt by Standard & Poor's and accused it of basing its decisions on politics and newspaper reports rather than economic reality.

"Italy has issued interventions that aimed at balancing the budget in 2013 and the government is preparing measures in favor of growth, the fruits of which will be seen in the short-long term period," Berlusconi said in a statement, issued on Tuesday.

Italy had its sovereign debt rating cut by Standard & Poor's late on Monday, the latest, but nevertheless surprise move in a deepening European debt crisis.

Standard & Poor's cut its rating one level to A/A-1 from A+/A-1+. The outlook is negative.

"We believe the reduced pace of Italy's economic activity to date will make the government's revised fiscal targets difficult to achieve," the rating agency said in a statement.

"The downgrade reflects our view of Italy's weakening economic growth prospects," Standard & Poor's said. "Italy's fragile governing coalition and policy differences within parliament will likely continue to limit the government's ability to respond decisively to the challenging domestic and external macroeconomic environment."

Moody's and Fitch's, the other two major ratings agencies, did not change their outlooks for Italy.

Italy's is the third largest economy in the eurozone.

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