Analysts at Citigroup said Italian Prime Minister Giorgia Meloni must win Thursday's confidence vote to prevent further intensification of tension in the bond market.

Giada Giani, senior European economist at Citigroup, said in an interview on Wednesday: "During periods of market turbulence, economic vulnerability rises. If there is a political surprise, or a defeat in the confidence vote, Italy could also face early elections, which would clearly act as a risk event and deal a greater negative shock to the market."

Italy's Chamber of Deputies will vote around midday on the electoral reform bill championed by Meloni, the final stage of a battle that has lasted for months. In July, the Meloni government unexpectedly suffered a setback in the Chamber of Deputies. Government whips have now steadied their camp and won three confidence votes earlier this week.

Giani also noted that the spread between Italian 10-year government bonds and German bunds, a gauge of country risk in the eurozone, has widened at present, mainly due to France's current political and economic difficulties. "We believe this mainly reflects contagion risk spilling over from France, rather than the market worrying about Italy's debt level alone," she added.

She added that one of the risks is that France's fiscal problems could obstruct further European integration and the launch of joint financial projects, thereby dragging down Italy. She described Italy's current fiscal plan as relatively "conservative" and expected its cash financing needs to begin declining next year.

Italian Finance Minister Giancarlo Giorgetti confirmed last week that Italy plans to reduce its deficit below the European Union's 3% of GDP red line, and forecast economic growth of 1% this year, higher than the previous estimate of 0.6%.

However, for the foreseeable future, the debt-to-GDP ratio will remain significantly above 130%.