Fitch downgrades Italy’s credit rating to BBB+

Fitch credit rating agency has downgraded Italy’s credit rating to BBB+ citing mushrooming debt and recession as the main reasons for the downgrade.

The international agency announced on Friday that it has cut Italy’s credit rating to BBB+ from A-, adding that “The increased political uncertainty and non-conducive backdrop for further structural reform measures constitute a further adverse shock to the real economy.”

“The inconclusive results of the Italian parliamentary elections on February 24-25 make it unlikely that a stable new government can be formed in the next few weeks,” Fitch said.

The European Commission said earlier this month that Italy would continue in its economic hardship including a rise in unemployment to hit 12 percent in 2014.

On October 31, 2012 Istat published figures showing unemployment rate in Italy at a new record high of 10.8 percent in September, the highest in almost eight years.

Italy started to experience recession after its economy contracted by 0.2 percent in the third quarter of 2011 and by 0.7 percent in the fourth quarter of 2011. Over the past decade, Italy has been the slowest growing economy in the eurozone.

Europe plunged into financial crisis in early 2008. The worsening debt crisis has forced the EU governments to adopt harsh austerity measures, triggering protests against spending cuts in many European countries.