UPDATE 1 — Italy's debt burden rising at alarming rate, economy minister says

Italian borrowing costs jumped at auction last week Inflation bound to rise if wars continue, minister says Italy hoping for early exit from EU budget procedure (Adds details and background) By Giuseppe Fonte ROME, Sept 18 (Reuters) — The cost of servicing Italy's public debt is rising at "an alarming rate" in the wake of geopolitical tensions, Economy Minister Giancarlo Giorgetti said on Friday, as the government prepares to update its budget plansfor 2027 onwards. Inflation is bound to rise "ineluctably" if the wars in Ukraine and the Middle East continue, Giorgetti told a conference in Portofino.

"I sent a message regarding interest rates, or rather, regarding the debt burden, which has begun to rise at an alarming rate," Giorgetti said, speaking via video link from the sidelines of a meeting of European finance ministers in Dublin. Italian borrowing costs leapt at an auction last week. 98% gross yield, the highest since November 2023. Under its most recent budget plan, Italy sees its public debt peaking at almost 139% of GDP this year, replacing Greece as the euro zone's most indebted country.

Giorgetti said rate hikes adopted by central banks across Europe and the United States were not likely to stem a rise in consumer prices. "Inflation stems from a supply shock, not from an overheated economy and demand that must be cooled by a restrictive monetary policy," he said. 8 billion already set aside this year to fund temporary excise duty cuts. Italy also plans to make full use of the extra deficit slack granted under Brussels' National Escape Clause from the bloc's budget rules to soften energy costs.

6% of GDP or around €14 billion through 2028. "I believe the European Commission will be open to granting us this budget leeway," Giorgetti said. Before invoking that clause, Giorgetti reiterated he was still hoping for a downward revision next week of Italy's 2025 deficit to below the EU ceiling of 3% of GDP. This would give Rome some hope of an early exit from a European Union disciplinary procedure.

The national and European statistics offices ISTAT and Eurostat will publish revised 2025 deficit data on September 22. com; +390680307711;)