While the Eurozone continues to be in a financially precarious position along with most of the world it seems there has been some good news for the debt swamped Italian economy.
Image via Kenny Miller
Now under technocratic control of Mario Montil following the resignation of everyone’s favourite fun time Prime Minister Silvio Berlusconi, Italy has launched a series of austerity measures in a bid to cut the debt and avoid a massive bail out like those given to Ireland, Greece and Portugal.
Italy raised 9.0 billion euros with a sale of six-month bonds at a rate of 3.251 per cent. This has lowered their borrowing rate but there are further tests ahead in terms of long term debt.
The country has also raised 7.0 billion euros worth of long term bonds with a return given over three, seven and ten years. However the 6.98 per cent return on the ten year loans has been seen as an unsustainable return by many analysts.
While it is a positive sign Italy will have to raise 450 billion euros throughout 2012 in order to stave off the debt problems and bring confidence back to investors. A number of schemes have already been introduced by the new government including privatisation schemes and an overhaul of Labour Market Legislation.
It is predicted that Italy’s economy will shrink by 0.4 per cent over 2012 with big problems remaining throughout Europe.
In a tumultuous year for the single currency it has ended by hitting a ten-year low against the yen and is close to a one-year low against the dollar.
Do you think Italy will turn around their economy? Tell us what you think in the comments section below.
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December 29, 2011
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