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MNI SOURCES: Italy Seeks EU Cover For Borrowing As Yields Rise

(MNI) Rome

The Italian government would rather wait for a signal from the EU before announcing new deficit plans.

The Italian government hopes for signals from the European Union in favour of more stimulus before increasing its projected budget deficit in coming months in response to the economic impact of the war in Ukraine, in the hope that approval from Brussels will reduce the impact of additional spending on its borrowing costs, sources close to the matter told MNI.

Italy, which favours an extension of the waiver on rules on public borrowing and debt in Europe’s Stability and Growth Pact and is already concerned by the recent rise in its bond yields, wants any additional spending to be perceived by investors as part of a joint European trend, said one of the sources. While the SGP is already suspended for 2022, extending that until 2023 would signal to markets that Italy is not alone in needing to spend more, they noted.

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The Italian government hopes for signals from the European Union in favour of more stimulus before increasing its projected budget deficit in coming months in response to the economic impact of the war in Ukraine, in the hope that approval from Brussels will reduce the impact of additional spending on its borrowing costs, sources close to the matter told MNI.

Italy, which favours an extension of the waiver on rules on public borrowing and debt in Europe’s Stability and Growth Pact and is already concerned by the recent rise in its bond yields, wants any additional spending to be perceived by investors as part of a joint European trend, said one of the sources. While the SGP is already suspended for 2022, extending that until 2023 would signal to markets that Italy is not alone in needing to spend more, they noted.

Keep reading...Show less