AP

LONDON A NUMBER of euro countries, including Italy, could see their credit ratings downgraded by the end of this month as they struggle to cope with too much debt and slowing economic growth, Fitch Ratings said on Tuesday.

Though the agency remains confident that the 17-nation eurozone will not break up over the next year, it is concerned about the weak economic outlook and is urging the European Central Bank to step up its involvement in solving the crisis, notably by buying more government bonds in the markets.

Fitch’s head of sovereign ratings David Riley said the agency will give its verdict on several euro countries by the end of January. Fitch currently has Italy, Spain, Belgium, Ireland, Slovenia and Cyprus on so-called “ratings watch negative” and Riley said the reductions could be up to two notches.

Much interest in the markets centers on Italy, the third-largest eurozone economy and considered too expensive to bail out. Riley says it is the “front line” of Europe’s debt crisis especially as it has to tap bond market investors heavily this year.

“The future of the euro will be decided at the gates of Rome,” he said at a conference in London.

Though Italy has a relatively low budget deficit in comparison to its economy, the country is saddled with massive amounts of debt and will have to raise up to €360 billion ($458 billion), according to Fitch.

Italy has found itself in financial trouble in recent months, with investors demanding increasingly high interest rates to lend it more money. Its long-standing prime minister, Silvio Berlusconi, was forced to resign late last year as the economic backdrop darkened, making room for a caretaker government under well-respected economist Mario Monti.

Riley said the challenge of Monti’s government is to convince investors it has a proper strategy to keep a lid on spending but also that it has a strategy for economic growth.

An expanding economy helps keep a country’s debt to GDP ratio under control.

Many economists think that the eurozone as a whole will fall into recession this year as the debt crisis has ravaged economic confidence and prompted banks keep a lid on their lending.

For Riley, getting growth going again is crucial if Europe is to finally emerge from a two-year crisis.