Italy fears subside as government reportedly plans to cut debt
Fears over Italy’s cost of borrowing eased this morning on reports that the country plans to slash debt by two per cent in 2021.
The Italian government has estimated a budget deficit of 2.4 per cent of GDP for 2019, before cutting it to 2.2 per cent for 2020, according to publication Corriere della Sera.
Read more: Italian borrowing costs rise to four-year high as political tensions mount
Prime Minister Giuseppe Conte also praised the euro as “un-renounceable”, as Italian bond tields fell following the news report.
It comes after the yield on a 10-year sovereign bond – which moves inversely to price – soared by more than 15 basis points to over 3.44 per cent yesterday. Today it fell back by 3.34 per cent.
The government had set a budget last week that would have run a deficit of 2.4 per cent for the next three years – a breach of EU rules, according to the European Commission.
London stocks opened slightly higher as concerns over Italy – considered one of the most vulnerable Eurozone economies – subsided.
Writing on Facebook, Conte said: "Italy is a founder member of the EU and of the monetary union and I want to reiterate that.”