After France, is Italy next? Goldman Sachs flags bond risks as Rome's deficit widens

Goldman Sachs says Italy’s higher 2027-28 deficit targets, rising yields and election uncertainty could weaken its debt outlook.

After France, is Italy next? Goldman Sachs flags bond risks as Rome's deficit widens

TL;DR

  • Italy's government approved 28 billion euros in additional borrowing for defense and energy spending over the next two years.
  • This has led to increased deficit targets for 2027 (3.4% of GDP) and 2028 (3.2% of GDP).
  • Goldman Sachs forecasts Italy's debt-to-GDP ratio may become the highest in Europe by 2028.
  • Election uncertainty ahead of the next general election could further pressure Italian government bonds.
  • Despite similarities to French fiscal pressures, PIMCO suggests Italy's debt is largely domestically held, providing a stabilizing factor.
  • Some analysts, like those at UBS, are taking short positions on Italian bonds, anticipating potential future concerns.