Italy 'vulnerable' without lower loan costs: PM

Share this article

Photo: Tiziana Fabi/AFP
10:11 CET+01:00
Italy's economy remains "vulnerable" unless borrowing costs on its 10-year sovereign bonds on the debt markets go back down to 3.0 percent from around 4.0 percent now, Prime Minister Enrico Letta said on Friday.

"As long as Italy does not reach 3.0 percent for its 10-year bonds and this does not become a reference point for the system, we will continue to be vulnerable," Letta said at a banking conference in Rome.

Italy has seen its borrowing costs ease since the height of financial market panic in November 2011 but they remain higher than those of countries that are seen as safe investments on the financial markets.

On Friday, Italy's rate was at 4.11 percent while Germany's was at 1.76 percent. The difference is made even worse for Italy by its enormous mountain of debt, which is close to €2.0 trillion ($2.7 trillion).

Italy's bond issues have gone well this year and on Thursday the Italian Treasury said it was cancelling two auctions scheduled for November and December because of lower funding requirements.

Story continues below…

The European Commission forecasts that Italian public debt will reach 134 percent of gross domestic product (GDP) next year -- a record level for Italy and the second highest ratio in the European Union after Greece.

Share this article

From our sponsors

Last chance to vote absentee in the US elections

Election Day in the U.S. is less than a month away, and time is running out for Americans living overseas to vote absentee. Here's what to do before it’s too late.


Popular articles