Italy's debt rose to 127% in 2012, real GDP below 2001 level

High tax burden in part due to Monti's austerity measures

Italy's debt rose to 127% in 2012, real GDP below 2001 level

(see related stories) Rome, March 1 - Recession-hit Italy's real gross domestic product (GDP) dropped below its 2001 level last year and its debt-to-GDP ratio rose to 127% in 2012, Istat said Friday. The national statistics agency added that the tax burden rose to a record 44%. The country's massive national debt of around two trillion euros is the main reason it was exposed to the eurozone debt. Italy's already high debt tax burden increased with hikes introduced by outgoing Premier Mario Monti's emergency government. These tax increase were part of efforts to restore order to the Italy's public finances after Silvio Berlusconi quit as premier in November 2011 when the country's financial crisis threatened to spiral out of control. Monti's austerity measures also had the effect of deepening the recession Italy slipped into in the second half of 2011. This is reflected by Istat saying Friday that Italy's GDP fell by 2.4% in 2012 and household spending dropped 4.3%, taking real GDP, which is adjusted for price changes, to below the levels of over a decade ago. The agency added that the deficit-to-GDP ratio was 3% and Italy posted a primary surplus of 2.5% in 2012, up from 1.2% in 2011.

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