Concerns over political instability in Italy have prompted hedge funds to ramp up their bets against the country's government bonds to the highest monthly level seen since the global financial crisis, according to a report by the Financial Times.

The report cites data from S&P Global Market Intelligence as revealing that investors have borrowed bonds worth more than €39 billion this month as they bet on a fall in prices due to the ongoing political uncertainty and economic turmoil caused by the surge in European natural gas prices following Russia's invasion of neighbouring Ukraine.

Italy enjoyed a period of relative political stability following Mario Draghi’s appointment as prime minister in February 2021, but the fall of his national unity coalition government in July of this year means that elections are looming large in September with nationalist leader Giorgia Meloni considered the most likely next prime minister.