January 10, 2012
A credit rating agency has announced that the struggling Italian economy poses the greatest threat to Europe’s financial crisis.
According to Fitch Ratings’ head of sovereign ratings David Riley, Italy is at the “front line” of Europe’s debt crisis, as its massive borrowing plan could lead to a potentially dangerous situation.
“The future of the euro will be decided at the gates of Rome,” Riley added.
The rating agency has also pointed out that Italy’s credit rating could be downgraded by the end of January and that the third-largest eurozone economy would possibly have to leave the euro bloc this year.
Riley also warned that the 17 eurozone countries would have to raise two trillion euros in 2012 in order to overcome the economic crisis despite their massive debts.
Italy, as well as nations such as Spain, Belgium, Slovenia, Cyprus, and Ireland have been put on a credit watch by Fitch.
Italian Prime Minster Monti has warned that the country would “collapse” like Greece without the new austerity measures, saying the package would also help solve the eurozone debt crisis.
Italy’s debt, totaling around 1.9 trillion euros, is at 120 percent of its Gross Domestic Product.
The government has said it will meet its target of balancing the budget by 2013 but has warned the Italian economy will slip back into recession next year.