A month ago the European Commission announced the end of the crisis. Yet this announcement turned out to be rather premature. And new record figures of Italy’s government debt prove it.
The January record was broken by March data showing a debt of 1 trn 946 bln euro. The reason for this increase is a decline in tax revenues by 0.5% in the 1st quarter.
As the public debt is swelling, Italy’s government programme aimed at spending cuts seems to be fruitless.
Tackling the expanding crisis, the European Commission should do its best to stimulate growth. In the context of the newly released data, the Prime Minister of Italy proposed to divide budget spending into two clusters: investments in the economy and other public expenditures.
What is more, Mario Monti expressed interest in paying back to private lenders using non-budget funds. He also offered to issue more bonds since bond yield is on rise.
Tensions are building up. There is nothing left to do but hope that the European Commission will take into consideration another call for changing the strategy of dealing with the debt crisis.