Brussels, 27/02/2013 (Agence Europe) - At each development in the sovereign debt crisis all eyes focus on the interest rates demanded for eurozone sovereign debt and the spread between the rates for Germany and the rates demanded of struggling countries.
On Wednesday 27 February, the day after publication of the results of the Italian general elections that plunged Italy and the eurozone back into uncertainty (see EUROPE 10794), the Italian treasury issued €6.5 billion in five and ten-year bonds at sharply higher interest rates, €4 billion of ten-year bonds at 4.83% (compared with 4.17% for a similar emission recently) and €2.5 billion of five-year bonds at 3.59% (2.94% in the past). The ten-year yield is the same as in October 2012.
In the evening, Italian Prime Minister Mario Monti, one of the main losers in the elections, and the president of the European Commission, José Manuel Durão Barroso, discussed the country's political situation ahead of the spring European Council. A press release will be issued in the near future.
On the previous day, Barroso said he hoped Europe would not give into populist temptation. The high votes for Silvio Berlusconi and Beppe Grillo's movement have been interpreted as widespread rejection of austerity policies recommended by Brussels. Barroso said it was clear that, after the greatest financial crisis in the Eurozone, very tough decisions had to be taken and implemented, and courageous, effective leadership is needed for that. The president of the European Council, Herman Van Rompuy, tweeted that he respected Italians' choices and was sure the new government would continue along the same path as its predecessors.
Pierluigi Bersani, leader of the pro-European centre-left coalition, says he is prepared to continue with consultations to form a new government. The leader of the Social Democrats at the European Parliament, Hannes Swoboda of Austria, has backed Bersani's ideas of reforming Italian politics by introducing measures including cost-cutting in the political world, reform of electoral law, strong anti-corruption and social measures, action to counter the rise in poverty and measures to encourage job creation. He said the Italian elections provided an opportunity to get out of the political impasse in Italy and in the wider Europe, listing fairer progressive policies. (MB/transl.fl)