Italy faces higher borrowing costs, sanctions on budget

MILAN — Italian borrowing costs have risen after the populist government resubmitted draft budget proposals without the significant changes sought by the European Commission.

The EU's executive branch acknowledged receipt of Italy's letter and said it would issue its response next week. The Commission had asked for revisions because it said the budget plans would prevent Italy's huge debt burden from falling.

Given the refusal of the Italian government to reduce its budget deficit forecast next year from 2.4 percent of annual GDP, analysts expect Italy will be subject to EU sanctions under so-called excessive deficit procedures, which could take months.

The government also kept its 1.5 percent growth forecast, which is higher than the EU's.

The interest rate on Italy's benchmark 10-year bond rose 0.03 percentage point Wednesday to 3.48 percent.

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