Italy: Price to pay - Rabobank

According to analysts at Rabobank, Italy’s populists may be able to claim victory in their first budget battle, but the market’s dissatisfaction will ensure that there is a price to pay.

Key Quotes

“BTP yields have spiked higher on the news that Italy’s government has agreed on a budget deficit figure of 2.4% of GDP.  Although this is well below the 3% of GDP budgetary criteria of the Eurozone’s Maastricht Treaty, it is significantly higher than the level which would have allowed Italy to take a grip of it huge national debt.  That said, the larger deficit will allow Deputy Premiers Di Maio and Salvini to pursue their populist manifesto pledge.  Whether or not this is theme just for Italy or whether populism will loosen the purse strings around Europe is now a concern for the region.”