Giulio Tremonti, finance minister, is drawing up new reforms designed to lift Italy’s stagnating economy in response to market pressures that followed the government’s disappointing austerity budget and following a downgrade of its credit rating.

Officials said after talks with business and banking representatives on Tuesday that the measures would begin with a decree by the end of this month to give the private sector fiscal incentives to invest in infrastructure and broadband internet.

Silvio Berlusconi, centre-right prime minister, earlier criticised Standard & Poor’s for cutting Italy’s credit rating, accusing the US agency of political bias. The spread between Italian and German bonds widened on the downgrade, approaching levels seen in early August when the European Central Bank stepped in to buy Rome’s debt.