Italy’s borrowing costs rise after election stalemate

<p>Italy’s borrowing costs have advanced following the country’s election stalemate.</p>

After it was revealed yesterday (February 26th) that Italy's two main political parties are locked in a leadership impasse following the general election, fresh data has indicated the country's borrowing costs have soared.

Italy sold its new ten-year government bonds at a yield of 4.83 per cent at its last sale in January, which is up from 4.17 per cent.

The yield provides an indication of the yearly interest rate Italy would have to pay to borrow new money and this data is a first test of the government's ability to borrow funds long-term at affordable rates following the country's inconclusive election result.

A split parliament is likely to make it hard for one group to push through its plans to revive the economy and this may stall the nation's plans to revive its beleaguered economy, which may in turn hamper its process of slashing debt levels, which stood at 127 per cent of gross domestic product in 2012.

At 11:50 GMT, the euro rallied against the dollar in forex trading by 0.3 per cent to $1.310.

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