Italian 'national consensus' urgent, says Brussels

The government has been beset with divisions in the governing coalition over aspects of the country’s austerity packages and resistance from trade unions, who staged a one-day general strike on 6 September against the cuts.

The commission would not respond directly to the S&P’s rating decision but offered its support to Italy, saying that the EU executive’s assessment of Rome’s two austerity packages, worth €48 billion and €45.5 billion respectively unveiled over the summer, were "even more ambitious" than those recommended by Brussels and endorsed by the Council of Ministers in July.

"Full implementation should allow Italy to achieve a sizeable primary surplus in 2013 and will be instrumental in putting a very high government debt on a steadily downward path," Altafaj-Tardio continued.

He said that the country is "taking the necessary measures ... to meet its targets."

But the verbal support offered to the Italian government was peppered with calls for Rome to act “boldly”.

"It is essential to pursue a bold reform agenda with comprehensive measures to tackle the deep-rooted structural weaknesses of the economy," he said.

"This is one of the major challenges that Italy faces nowadays."

The rating agency kicked the country’s rating down a notch on Monday, from A+ to A, blaming the country’s political crisis as much as the state of its economy

"The downgrade reflects our view of Italy’s weakening economic growth prospects and our view that Italy’s fragile governing coalition and policy differences within parliament will likely continue to limit the government’s ability to respond decisively," the agency said in its assessment.

"The 'political' and 'debt' scores were the primary contributors to the downgrade."

The agency also said that austerity measures could lower growth, resulting in the government likely being unable to meet its austerity targets.

"More subdued external demand, government austerity measures, and upward pressure on funding costs in both the public and private sectors will, in our opinion, likely result in weaker growth for the Italian economy," the paper said.

The commission said it was "more optimistic".

"When could [austerity and reforms] deliver? I am more optimistic ... and think that there are measures than can deliver in a shorter term and can have a sensitive impact in terms of growth in the coming months and years. We don’t have to wait till 2013 or 2014."

Italian Prime Minister Silvio Berlusconi for his part attacked the agency in a brief statement, saying: "The assessments by S&P seem dictated more by newspaper stories than by reality and appear to be negatively influenced by political considerations."