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Bank of Italy sees risk of vicious circle over country's debt costs

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By Reuters

ROME (Reuters) – The Bank of Italy said on Tuesday there was always a risk of a vicious circle over the country’s debt costs, with repercussions for the real economy.

“Given the (debt’s) size and the need to service each year a not insignificant amount (about 400 billion euros), the danger of triggering a vicious circle … with repercussions on the real economy, is always present,” Director General Luigi Federico Signorini said during parliamentary testimony over the government’s budget plan.

He added that the turbulence on financial markets after the approval of the government’s expansionary multi-year budget plan required “clarity and certainty” over the plans to reduce the fiscal deficit.

(Reporting by Giuseppe Fonte,)