Italian Bailout Looking Inevitable as Borrowing Costs hit New Record

09 November 2011

More bad news for Europe's beleaguered and beguiled single monetary union today as Italy's borrowing costs soared to a record high. With the yield on 10 year Italian government bonds now at 7%, the level at which Greece, Portugal and Ireland were forced to ask for a bailout, it is looking increasingly inevitable that Italy will be forced to make the same request.


This is massively worrying for Europe, and for the global economy. Italy is not only the third largest economy in Europe, but the third largest sovereign borrower in the world. A bailout for Italy will make those paid out before it look like pocket change.


What's more, if Italy finally does succumb to the crisis, it gives us even less chance of Spain avoiding the need for assistance. This would take the problem up to Europe's second biggest economy with an even bigger bailout needed.

Hardly surprising then that IMF managing director Christine Lagarde today warned of the spectre of a "lost decade" of global growth.

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