Euro improves as Italy seems more willing to cut budget deficits in future
Italian borrowing costs eased off four-and-a-half-year highs, after jumping 50 basis points since budget details emerged last Thursday
London — The euro bounced off six-week lows on Wednesday, European shares rose and Italian bonds rallied as some of the worries that have rippled across markets this week were soothed by signs Rome was amenable to cutting budget deficits and debt in coming years. A report in the Corriere della Serra newspaper — later confirmed by a government source — said the deficit would fall to 2.2% of GDP in 2020 and to 2% in 2021 from the 2.4% earlier outlined. That brought relief to markets that had fretted that Italy's decision to expand budget deficits well beyond what was agreed by a previous government would deepen its debt problems while stoking conflict with the EU, whose officials have already expressed concerns. The euro, which had hit a six-week trough of $1.1506 after suffering five straight days of losses, firmed 0.3% while Italian borrowing costs eased off four-and-a-half-year highs, after jumping 50 basis points since budget details emerged last Thursday. Two-year yields fell 15 ...
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