Italy's credit rating has been downgraded by the same ratings agency that downgraded the U.S. credit rating last month.
Late Monday, Standard and Poor's lowered Italy's rating from A+ to A with a negative outlook for the future, citing Italy's weak economy and an unstable government for the move.
In response, Italy criticized the S&P downgrade as political, saying the rating agency did not take into account the country's efforts to boost growth and reduce its debt.
Italian Premier Silvio Berlusconi's office said Tuesday the evaluation "seems dictated more by behind-the-scenes reports in newspapers than reality and seems contaminated by political considerations."
S&P warned it may downgrade Italy again, citing political differences that may limit the country's ability to respond decisively to its debt crisis.
"What we view as the Italian government's tentative policy response to recent market pressures suggests continuing future political uncertainty about the means of addressing Italy's economic challenges," S&P managing director David T. Beers said.
Italy has the largest government debt of any European nation except Greece. It's economy has shown no significant growth in more than a decade.
As the world's seventh-largest economy, a default by Italy would threaten other European economies as well as the U.S. economy.