Italy's level of debt is a cause of concern and the situation will not get easier next year when money will be no longer as easy to obtain from the European Central Bank, ECB policymaker Ewald Nowotny said.

"Italy is in a much better position than Greece, but the level of debt is indeed worrying," Nowotny said in an interview with Austrian daily Kurier published on Saturday.

Italy's public debt stood at more than 130 percent of GDP last year, the highest in the euro zone after Greece. But the Italian government is looking to boost spending to engineer faster economic growth, flouting European Union rules.

Concerns over the budget plans contributed to an increase in the spread between German and Italian benchmark 10-year bonds to 5-1/2 year highs and later on Friday credit rating agency Moody's cut the country's sovereign debt rating to one notch above junk status.

In 2018 and 2019, Rome will have to borrow around 380 billion euros (£335 billion) each on the capital market, Nowotny, who is also the chief of Austria's central bank, said.

"But someone has to buy these government bonds. And it turns out that this is only possible at higher interest rates. That in turn increases the budget deficit."

As the ECB's bond purchase programme will end this year, it is mostly Italian banks buying the bonds, the veteran policymaker said. "The interdependence is problematic."

The wrangle over Italy's budget is expected to top the agenda at the ECB meeting on Thursday.