Helsinki

Monti warns of Euro-skeptic Italy over bond pressure

Premier says no intending to seek bond support for now

Monti warns of Euro-skeptic Italy over bond pressure

(ANSA) - Helsinki, August 2 - Premier Mario Monti has warned that Italy risked turning Euro-skeptic if its bonds stayed under pressure and its borrowing costs remained high despite efforts to put its economic house in order. Monti was speaking early on Thursday before market disappointment at European Central Bank President Mario Draghi's comments on how it intends to fight the eurozone crisis sent the yield spread between 10-year Italian bonds and the German benchmark soaring over 500 points. "The high level of the (bond yield) spread does not necessarily lead to good policies and economic reforms, but exactly the opposite," Monti told reporters in Helsinki before ending a visit to Finland to travel to Madrid for talks with Spanish Prime Minister Mariano Rajoy. "That's because I can guarantee that if the spread stays at this level for some time, we will not see a pro-Europe government in power in Italy but one that is not orientated towards the euro and in favour of budget discipline". Former European commissioner Monti's emergency technocrat administration, who has introduced a series of structural economic reforms and public-spending cuts, is set to make way for a return to a government run by Italy's political parties following elections next year. The spread, a barometer of Italy's borrowing costs and of investor faith in its ability to weather the eurozone crisis, climbed by around 60 points to close at 505.9 with a yield close to 6.3%. Monti said Italy has "no intention at the moment" of asking for European rescue funds to be used to support its bonds in Madrid later on Thursday, but added that he did not know if Italy would need the so-called spread shield in the future. He also said that, while the markets responded badly to Draghi's comments, he assessed them positively. "I only see steps forward and no steps backward," Monti said. Draghi said that the European Central Bank will draft plans in the coming weeks on mechanisms to support eurozone countries facing soaring borrowing costs by buying their state bonds. Draghi said it was within the central bank's mandate to intervene on the money markets to alleviate the current "exceptionally high" bond-spread levels, which he described as "unacceptable". However, the comments did not seem to meet the high expectations Draghi created last week when he said the ECB would "do whatever it takes" to stop the crisis, with European stock markets sustaining big losses and yield spreads climbing sharply on Thursday. Those words sparked speculation the bank would soon start buying under-pressure Spanish bonds and possibly Italian ones, but on Thursday he suggested any bond buying would not start until September. He also suggested that the ECB would only act if member states requested bond support from the European Union rescue funds.

Lascia il tuo commento

Condividi le tue opinioni su Gazzetta del Sud online

Caratteri rimanenti: 400

Le altre notizie

i più letti di oggi