WASHINGTON, 12 April 2025 (BSS/AFP) – US credit ratings agency Standard & Poor’s (S&P) has upgraded Italy’s sovereign credit rating from BBB to BBB+, citing improved economic stability and stronger financial buffers in the face of mounting global challenges.
Italy Receives Credit Boost
In its latest report, S&P acknowledged Italy’s enhanced economic, external, and monetary resilience, noting that the country’s gradual fiscal consolidation since the COVID-19 pandemic had helped bolster its position. The credit outlook remains stable, indicating that further improvements are not immediately expected, but risks of downgrade are also minimal.
“Italy’s underlying budgetary position is improving,” the agency stated, highlighting that the country posted a primary budget surplus of 0.4% of GDP in 2024—its first such surplus since the pandemic’s onset.
| Credit Rating Comparison (2025) | S&P Long-Term Rating |
|---|---|
| Germany | AAA |
| France | AA |
| United Kingdom | AA |
| Italy (new rating) | BBB+ |
| Italy (previous rating) | BBB |
Debt Still Investment-Grade, But Room to Improve
Although the upgrade keeps Italy’s debt firmly in the investment-grade bracket, it remains well below the top-tier ratings of Europe’s largest economies such as Germany, Britain, and France.
S&P’s decision recognises Italy’s commitment to responsible fiscal policy and resilience despite a difficult global economic backdrop, including inflationary pressures, geopolitical tensions, and sluggish global trade.
Key Factors Behind the Upgrade
S&P attributed the improved rating to several interconnected factors:
Enhanced fiscal discipline: Gradual efforts to reduce deficits and manage public spending more efficiently.
Stronger external accounts: More favourable trade and investment flows.
Monetary policy stability: Supportive stance from the European Central Bank contributing to controlled inflation and liquidity conditions.
However, the agency also warned of persisting structural weaknesses that could weigh on future growth prospects.
| Challenges Identified by S&P | Description |
|---|---|
| Ageing population | Shrinking workforce and increasing pension costs |
| Low productivity | Below-average labour and innovation output |
| Weak foreign direct investment (FDI) | Limited global capital inflows relative to peers |
Global Trade Tensions Still a Concern
S&P’s report also included assumptions about ongoing US-EU trade tensions, with 10% baseline tariffs on EU goods and sector-specific duties—25% on steel, aluminium, and automobiles—remaining in place.
Under these assumptions, the eurozone’s total economic output could shrink by approximately 0.2%, creating a headwind for member economies including Italy. The rating agency noted that a worsening of trade frictions or broader global economic decline could pose risks to the stability outlook.