Cost of borrowing for Italy and Spain spikes to highest since 2008 financial crisis
Italy and Spain’s cost of borrowing hit the highest levels since Lehman Brothers collapse sent the world into a downward spiral today.
The countries are the third and fourth biggest economies in the eurozone and there are ongoing fears they could be sucked into a debt spiral.
In the first Italian bond auction since Standard & Poor’s cut the country’s credit rating last week, the rate hit over 3pc compared with 2.14pc last month.
Spain was also forced to pay higher rates to raise €3.225bn in short-term debt, another sign of pressure on its sovereign debt outlook.
Italy has introduced strict new austerity rules while Spain has promised to reduce its annual deficit from 9.2pc of gross domestic product to 6pc this year.
The Spanish government is struggling to raise money in the open markets in a bid to reach these targets.