Italy endures credit rating cut

5 October 2011

The credit rating of the Italian government has been cut by Moody's Investors Service.

A substantial increase in long-term funding risks for the euro area was cited by the ratings agency as it slashed the level from Aa2 to A2 with a negative outlook.

The organisation blamed this rise on reduced confidence with regard to confidence in eurozone government debts and claimed market sentiment had begun to turn against the euro.

Silvio Berlusconi, prime minister of Italy, said the move did not come as a shock and noted: "The Italian government is working with the maximum commitment to achieve its budget objectives."

The politician explained the European Commission - which is the European Union's executive body - has already agreed to proposals that could see the government's budget more effectively balanced over the next year.

Such a downgrade came despite low private-sector debt levels across the country and reduced borrowing needs in Rome.

By Tony Aynsley

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