Goldman Sachs Warns of Rising Bond Risks as Italy's Deficit Widens
Italy has raised its deficit targets for 2027 and 2028 following the approval of an additional €28 billion in defense and energy spending. Goldman Sachs analysts warn that these increased deficits, combined with higher borrowing costs, could push Italy’s debt-to-GDP ratio to become Europe's highest by 2028. The government plans to present its updated budget next week, which will reflect the new allocations. The deficit targets for 2027 and 2028 have risen from earlier projections of 2.8% and 2.5%, respectively, now reaching 3.4% and 3.2%. This comes amid broader concerns over European fiscal health following recent turmoil in French bond markets. Goldman Sachs' Filippo Taddei highlighted that the deficit increase could pressure Italian government bonds ahead of next year's general election. Election uncertainty may lead to looser fiscal policy, potentially weakening Italy’s debt outlook after years of consolidation.
Topics: defense spending deficit targets energy spending European fiscal pressures government debt Italy