After the completion of Brexit, Italy faces the third-largest economy in the European Union (EU). Brexit, also known as the British exit from the European Union, sees the European Union lose one of its superpowers.
Italy Faces Third-Largest Economy
Behind Germany and France, Italy faces the third-largest economy in the European Union. In recent years, Italy’s economic growth remained below the average for the European Union as a whole. In addition, Italy maintained a higher than average unemployment rate compared to the other member countries in the European Union.
Currently, Italy formed its government through a coalition of its top political parties. The incoming coalition proposes some major changes. The goal is addressing Italy’s challenges of economic growth and unemployment.
In particular, the new Italian coalition political movement plans to reduce the government spending constraints. Today, the European Union imposes spending constraints on its member countries. As a result, investors worry that Italy also faces an increase to its already large budget deficit. Additionally, the budget deficit risk only increased with talks that Italy could one day leave the European Union, following in the United Kingdom’s footsteps.
Right now, the United States economy confronts uncertainty with these actions. The resulting uncertainty inspired investors to shift their funds over to safer assets. In conclusion, stocks took a hit. Finally, outside of Italy’s, global bond yields declined further.
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