Standard & Poor’s has taken a more pessimistic view of the state of Italy’s finances.
The credit rating agency on Friday revised its outlook on Italy to “negative” from “stable,” saying its sees the Italian government’s fiscal and economic polices weighing on the country’s growth prospects.
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S&P, however, maintained Italy’s debt rating at “BBB,” still investment grade but two notches above “junk” status. The lowering of a country’s outlook can precede a downgrade.
Italy’s populist government is moving to dramatically boost spending, pushing its budget deficit to 2.4 percent of GDP. That has put it at loggerheads with the European Union.
S&P said it’s expecting Italy’s deficit to be closer to 2.7 percent of GDP next year. It says that will stifle the incipient private-sector recovery in Europe’s fourth-largest economy.
