Financial Times: Could the Euro’s Italian “Nightmare” Come True?

More than 10 weeks after its election, Italy’s Five Star Movement and the far-right League struggle to the finishing touches on a ruling coalition, extending negotiations over issues dividing the parties including who will serve as prime minister. Coalition proposals include a reduced income tax, a flat tax, social security payments and a return to old pension rules. Previous governments had tried to bring debt levels under control. One economist suggests the proposals could increase the budget deficit from 1.3 percent to 5.5 percent of GDP, as reported by Mehreen Khan for the Financial Times. Italy’s political system was designed to prevent concentrated power, impulsive decisions and fascism, suggests another analyst. Abrupt changes could increase the cost of Italy’s borrowing, and the markets do not expect the country to abandon the euro. Italy is the European Union's fourth largest economy and third largest for the euro. The coalition’s failure could present challenges for Italy and the European Union, and Khan concludes, “The next downturn could then prove to be the EU’s real Italian nightmare.” – YaleGlobal

Financial Times: Could the Euro’s Italian “Nightmare” Come True?

Italy’s political leaders struggle to form a ruling coalition, and the cost of failure for its euro rebels may be more dangerous for the EU
Mehreen Khan
Tuesday, May 15, 2018

Read the article about Italy’s efforts to form a ruling coaltion from the Financial Times.

Copyright The Financial Times Limited 2018. All rights reserved.

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