Welcome to the Eurointelligence podcast. I'm Wolfgang Munchau and with me, Izanne Monsenk and Jack Smith.

Today we would like to talk about rising interest rates, rising bond spreads and rising deficits.

They are of course all related. We have reported this morning that the ECB is getting more concerned about the Italian bond spread.

Long-term bonds are now at over 5%. We're

approaching not quite levels at the Eurozone crisis, and obviously with inflation providing

some relief to the real value of debt. But these are levels with which policymakers are not comfortable

to put this mildly. We are not far away from a situation where things could

get more serious and where the ECB would have to at least consider using the instruments

that has given itself. We're not predicting another sovereign debt crisis just yet. If it were to

happen, what we're seeing today would be a precursor of something like this. So we certainly need

to keep a close eye on this.

Jack, can you tell me what's happening in Italy? The big thing that has happened in Italy is,

firstly to say the Italian government is going to be releasing its kind of updated budget in front

of the Italian cabinet is coming Monday. However, a couple of weeks ago, the Treasury basically released a kind

of update to its budget planning. In Italian, this is known as the NADIF. What the NADOF came out with

was substantially higher deficit targets for this year and the next year, you know, targets and projections. So for this year,

the 2023 target went from 4.5% of GDP to 5.3% of GDP. And for next year, the target has gone

from 3.7% of GDP to 4.3% of GDP. When you look at it this way, these are

quite substantial jumps in what the government is both forecasting and planning on doing

for the coming years. In terms of the current EU fiscal target, which is a 3% deficit,

the Italian government at the moment is not expecting to reach that until 2026. Susanna, how is the situation in France? I mean,

we're always talking about Italy, but the fiscal, the broad fiscal outlook for France is not all

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