EU reject Italian budget draft

midlander12

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Italy's right wing scored a massive win the Italy's previously most left-wing region, Bassilicata in the far south. The right's vote more than doubled to 42%, while the left's collapsed from nearly 60% to 33%. Salvini's Lega itself, which did not contest the region in the last locals, accounted for nearly all the increase in the right's vote, at 19%. Looks like Salvini's star at home continues to rise, irrespective of the disdain with which EU and the left view him.
 


Watcher2

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For the first time ever, the EU has used its powers under the Stability and Growth Pact to reject a draft budget submitted by a member state by saying no to Italy's plans to run a 2.4% deficit, three times the EU mandated target of 0.8%.

Italian bond yields are up on the back of the move, and the government there is refusing to back down, saying there is no plan B. The country has the second-highest debt to economy size ration in the EU after Greece, and can ill afford to have to pay more to service it.

Interesting times ahead.

EU rejects Italian draft budget, setting up standoff with defiant Italy | Reuters

Subscribe to read | Financial Times
The debt problem has not gone away you know. Its going to be a big, big problem.
 

McDave

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The debt problem has not gone away you know. Its going to be a big, big problem.
Indeed. But more for Italy than the Eurozone. The great bulk of the debt resides domestically in Italian banks and private hands. France has big exposure (one wonders also how many Italian assets have been vested there - effective collateral). But Italy is in a very weak position indeed with little real leverage.
 

Clanrickard

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The debt problem has not gone away you know. Its going to be a big, big problem.
And with Salvini around and the Five Star Movement it will likey get worse if their manifestos are anything to go by. Italy either leaves the Euro or carries the sort of painful reforms that no politcal party in Italy really is proposing.
 

Watcher2

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Indeed. But more for Italy than the Eurozone. The great bulk of the debt resides domestically in Italian banks and private hands. France has big exposure (one wonders also how many Italian assets have been vested there - effective collateral). But Italy is in a very weak position indeed with little real leverage.
Large debt is not just Italy's problem. Our own levels are astronomical. When interest rates push up, we are in a very poor position. I wonder how we will weather it.
 

McDave

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I agree on our debt. Our ‘real economy’ debt is far too high. The ‘official’ low GDP figure is misleading. And a real risk which I think O’Donoghue is far too blithe about.

However, if our debt problem blows up again, it won’t be a systemic problem for the EZ. Nor will, I think, Italy’s be as it is mostly domestic. Italy accordingly can’t threaten the EZ as it would be cutting its nose to spite its face.
 

Sync

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Or collapse. Like every other Italian govt ever.
Lasted longer than expected to be fair.

Italy’s far-right leader, Matteo Salvini, has called for new elections as he urged the prime minister to reconvene parliament to confirm that the coalition government is no longer viable.
The dramatic move on Thursday came after months of fighting between his League party and the Five Star Movement (M5S).
The cavernous differences between the parties were clearly exposed on Wednesday when parliament rejected a motion by M5S to block a high-speed rail project linking Italy and France. M5S has built most of its popularity on vehemently opposing the long-stalled TAV but was outvoted by the League and opposition parties.
 


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