In the age of austerity, investors are calling for EU leaders to come up with a convincing plan to boost economic growth after Friday’s downgrade of nine eurozone countries by credit ratings agency Standard and Poor’s.
Market observers say that spending cuts alone will not be enough to save the single currency and insist deeper reforms are needed. Among them is Bertrand Lamielle, an analyst as B* Capital, who said: “The big decisions that have to be taken aren’t just about cutting here and there. We really have to put in place structural reforms and take an entirely different way of looking at state budgets”.
Italy was one of those countries which saw its sovereign rating cut. The reaction of people on the street was one of suspicion.
“Let’s say that the downgrade is a big deal, but in my opinion it is a question of American political attempts to save the dollar,” said one Rome resident.
Standard and Poor’s said using austerity alone could “become self-defeating”, leading to a drop in domestic demand and lower national tax revenues.