Italy’s Political Situation

After the completion of the United Kingdom’s exit, Italy will have the third largest economy in the European Union (EU) behind Germany and France. In recent years, Italy’s economic growth has been below the average for the EU as a whole, and its unemployment rate has been higher than average. Italy’s government is formed through a coalition of its top political parties, and the incoming coalition is proposing some major changes to attempt to address these issues. In particular, it would like to reduce the government spending constraints imposed by EU rules. Investors are concerned that this will lead to an increase in Italy’s already large budget deficit and that the risk has increased that Italy could one day exit the EU. The resulting uncertainty has caused investors to shift to safer assets, hurting stocks and pushing global bond yields (outside of Italy) lower.

2018-07-30T20:35:11+00:00 May 29th, 2018|Categories: In The News|