Moody’s has cut Italy’s rating by three notches from Aa2 to A2, putting more pressure on the global markets.
The ratings agency blamed a “material increase in long-term funding risks for the euro area”, due to lost confidence in eurozone government debts.
Fellow ratings agency Standard & Poor’s has already cut its rating on Italy to a single A.
According to the BBC, Italian prime minister Silvio Berlusconi says the decision was expected.
Berlusconi says: “The Italian government is working with the maximum commitment to achieve its budget objectives.”
He says that a plan to balance the government’s budget by 2013 has been approved by the European Commission.