Regarding the Fitch new rating it should be underlined that several positive features are recognised in the present Italian situation, namely that :
- Italy has progressed substantially with fiscal consolidation. Public sector deficit was 3% of GDP in 2012, a result of 2.3pp fiscal consolidation in structural terms, according to the recent estimate of the European Commission.
- The fiscal measures already adopted will be sufficient to deliver a further narrowing of the budget deficit in 2013 despite the continuing recession.
- Low contingent fiscal risks from the banking sector; an underlying budgetary position close to that necessary to stabilise the government debt to GDP ratio; and sustainable pension system underpins confidence in the long-term solvency of the Italian state.
- The Italian sovereign has demonstrated its financing flexibility and resilience during the crisis reflecting a strong domestic investor base and average duration of 4.74 years.
- Finally, The rating remains supported by the relatively wealthy, high value-added and diverse economy with moderate levels of private sector indebtedness.
The political uncertainty following the Italian parliamentary elections on 24-25 February is part of a normal democratic process. We reaffirm the confidence that Italy will find the political solutions and will therefore continue the undergoing reform process. In the meantime, the present government remains of course in place for current affairs. Fitch also speaks about “the unexpected fall in employment and persistently weak sentiment indicators, increase the risk of a more protracted and deeper recession than previously expected”.
The situation in the last quarter was worse than expected everywhere in Europe and, with regard to unemployment it is important to note that according the European Commission and other international organisations it has increased mostly because they are more people looking for a job – women and young people. Many companies prefer to keep their employees (“labour hoarding”) albeit on lesser hours in order not to have to hire and train new ones when the economy picks up.