Eight years ago, Italy’s state auditor drew widespread derision when it claimed that credit rating agencies should have taken the country’s history and beauty into account before downgrading its debt. With borrowing costs on the rise once again, a better argument is required. Instead of art, Italy should focus on the eurozone.
Rising inflation, an economic slowdown and the first European Central Bank rate rise in over a decade are all problems for a country with Italy’s level of debt. The resignation of prime minister Mario Draghi and with it the possibility of a Eurosceptic government ratchets up the fear in bond markets.
Italy recently paid the highest rate to borrow since the eurozone crisis. The spread between Italian and German 10-year bonds, regarded as the benchmark, reached a two-year high last month.