SEVERAL 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.
Fitch Ratings head of sovereign ratings David Riley said the agency will give its verdict on several countries by the end of January. It 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 centres on Italy, the third-largest eurozone economy and considered too expensive to bail out. Mr Riley said it is the "front line" of Europe's debt crisis.
"The future of the euro will be decided at the gates of Rome," he said.
Although 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 a large chunk of cash in the markets this year.
It has found itself in financial trouble in recent months, with investors demanding increasingly high interest rates to lend it more money. Former 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.
Mr Riley said the challenge for Mr 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.
Mr Riley said France, the eurozone's second-largest economy, is also facing difficulties because of its debt burden, which is over 80% of GDP, although its cherished triple A rating is not one of those facing an imminent cut by Fitch.
Mr Riley also said that Greece will remain at the heart of the crisis over the coming months as it seeks to negotiate a deal with private creditors on reducing the value their holdings of Greek debt. He said even that deal would fail to materially lighten Greece's debt load, though he was confident Greece would still be a member of the eurozone this time next year.