The crisis on international markets caused by the subprime credit crunch in the United States will reduce Italy's projected GDP growth from about 2% to 1.7% and cost each Italian family 300 euros in 2007, according to a report from the Eurispes think-tank.
Although the subprime crisis only marginally affected Italy directly, its aftermath will be costly because of the country's massive public debt, Eurispes said.
According to the research institute, it will result in a decline in consumer spending which in turn will cause a drop of some 3.3 billion euros in family revenue.
The subprime crisis broke out in the US when investment funds extending higher-interest mortages to high-risk borrowers, those not eligible for the prime rates charged by banks, were found to be over-extended and risked collapse.
