Italy’s public debt has reached a new record high, surging by nearly €5 billion ($5.6 billion) in the first five months of this year, according to data published by the Bank of Italy. Government debt in Italy reached €2.816 trillion ($3.1 trillion) in May after surpassing the €2.800 trillion mark in April. This represents a €4.8 billion ($5.3 billion) increase compared to the previous month.
The President of the National Union of Italian Consumers (UNC), Massimiliano Dona, expressed concern over this situation, stating, “Another historic record! This is a big disaster for our country, given the constant rise in interest rates, leading to an increase in the burden of public debt, which the Italians pay from their taxes.”
Italy is currently the second most indebted country in the Eurozone after Greece, and it is one of the most highly indebted nations globally. The level of state borrowing amounts to approximately €47,862 ($53,729) per citizen or about €107,500 ($120,667) per family, highlighting the magnitude of the issue.
Dona emphasized the need to address the out-of-control public debt in order to achieve tax cuts. He suggested changing the structure of the debt by providing support to low-income households and implementing windfall taxes. According to Dona, tax cuts are impossible while the public debt continues to rise.
Italy’s debt-to-GDP ratio reached an unprecedented high of about 155% during the peak of the Covid-19 pandemic in 2020. While the Italian economy has made some recovery since then, the ratio remains one of the highest in the European Union at 144% in the last quarter of 2022, according to Eurostat.
The alarming levels of public debt in Italy pose significant challenges for the government and the economy. It restricts the flexibility to implement tax cuts and allocate resources towards other important sectors such as healthcare and education. Efforts to tackle this issue require a comprehensive strategy that includes both structural changes to the debt and measures to support vulnerable households.
The situation in Italy highlights the broader issue of rising global debt, which has the potential to trigger a new financial crisis. Countries must carefully manage their public debt levels to avoid economic instability and ensure sustainable growth.