Italy's public debt has hit an all-time high and the annual budget deficit has been reported bigger than a year before, mainly due to the country’s share of bailouts for other eurozone states.
Public debt at the end of June rose 6.6 billion euros to 1.973 billion euros, the Bank of Italy said on Monday, Reuters reported.The Bank of Italy also reported that in the first half of the year the annual budget deficit, at 47.7 billion euros, was 1.1 billion euros higher than in the same period of 2011.
In a further sign of unease over public finance, the Italian Treasury has paid slightly higher interest rates to borrow money for 12 months.In a bid to attract investor to the first auction bond this month, Italy paid 2.76 percent, slightly more than 2.69 percent in July. Italy's borrowing costs are under pressure due to investor concern about whether eurozone leaders can safeguard the common currency, and whether Italy can continue servicing its enormous public debt, which is equal to 123 percent of GDP.
Italy's economy has shrunk for the fourth quarter in a row, contracting 0.7 percent in the three months through June, underlining a deepening recession in the country.Italy, the eurozone's third largest economy, also saw unemployment rise in June to a new record high of 10.8 percent, the highest in almost 13 years. The continued recession is gloomy news for Italians, who have seen a series of austerity packages, tax hikes and pension charges as they struggle to battle off the debt crisis. KA/JR