15 Nov 2011

Italy's interest bill climbs as borrowing rate hits record high

9:48 am on 15 November 2011

The cost of borrowing for Italy's government has reached a new eurozone record of 6.29%.

Italy succeeded in borrowing €3 billion for five years but the interest rate it was forced to pay was the most it has paid for more than 14 years.

Given that Italy has to borrow more than 100 times that sum next year, there is a serious risk that its interest bill will rise sharply, the BBC reports.

The financial markets are still wary about the task facing the man asked to be Italy's next prime minister, Mario Monti.

Mr Monti is attempting to put together an emergency cabinet to pull the country out of its debt crisis.

If the government's interest bill keeps rising, that will intensify the squeeze on what it has available to spend on public services.

Meanwhile, the interest rate for Spanish government debt has reached the highest level since August, renewing concern that Spain could be next to succumb to the European debt crisis.