Italy’s borrowing costs have hit catastrophic levels as Prime Minister Silvio Berlusconi’s promise to quit failed to convince financial markets the country’s problems can be brought under control.
It has now passed the seven percent mark for interest rates on borrowings with yields on its 10-year bonds hitting 7.4 percent at one stage on Wednesday.
Reuters’ Chief Economic Correspondent Gavin Jones said that puts it in with the bailout crowd: “Italy looks as though it is reaching, or has in fact possibly gone past, a point where it is going down the same slippery slope that Ireland, Portugal, and before that Greece, went down. Bond yields are now at 7.4 percent and it is looking very difficult to see a way back from this.”
Italy’s dire situation poses a major threat to the survival of the euro. That is because it is the single currency bloc’s third largest economy and is viewed as too big to be bailed out by the other euro zone countries.