GIS Dossier: The Italian case
Politically and financially, Italy has come to be regarded as a weak link in the European Union. Its shaky banks and enormous public debt almost blew apart the euro area during the debt crisis of 2010-2012, and could still do so. Its government, a marriage of populists on the left and right, claims to be the precursor of a protest wave that will sweep this year’s European Parliament elections. But as usual, it is hard to tell whether Italy is headed for disaster or more of the same.
2019 Global Outlook: Another year near zero
It has been a decade since global interest rates reached the zero lower bound, where monetary policymakers lose their ability to stimulate the economy using conventional policy tools. Among the largest global central banks, only the United States Federal Reserve has set its benchmark above 2 percent. Will this anomaly end in 2019?
U.S. interest rates: Where will they take us?
U.S. President Donald Trump worries that the Federal Reserve is raising interest rates too quickly. In fact, the Fed has engaged in only moderate tightening so far. By mid-2019, it is likely to end the cycle and hold rates steady, since the U.S. central bank is probably focusing on restricting the money supply rather than reaching an interest rate target. At that point, Mr. Trump will no longer be able to blame the Fed for any fiscal trouble and will have to implement reforms if he wants to spur growth.
GIS Dossier: Angela Merkel
When Angela Merkel finishes her term as German chancellor in 2021, it will mark the end of an era. Love her or hate her, this shrewd political operator has had a huge impact on Germany, Europe and the wider geopolitical scene. This GIS Dossier compiles our experts’ analysis of her policies and the effects they have had across the globe.
The Italian challenge
Italy’s public finance troubles are making waves again, but the new government’s budget proposal does not spell disaster, nor should debt servicing create a big problem, considering today’s low interest rates. But Italy’s leaders have decided to transform their conflict with the European Union into a casus belli. Will the conflict end in an Italian crisis or a new EU architecture?
The euro and the promise to end monetary profligacy
As the European Central Bank winds down its quantitative easing program, none of its future policy options look especially promising for the euro. While investors would welcome a more neutral monetary stance, that could spur political tensions in the euro area that could roil financial markets. Meanwhile, regulation is on the rise and growth could suffer, with unpleasant consequences for the single currency.
Redressing the European position
In urging Europe to become stronger, politicians like French President Emmanuel Macron and German Foreign Minister Heiko Maas are right. But their statements sound more like expressions of defiance toward Washington than serious declarations of intent.
Will Italy make it?
Italy’s public finance situation is worrying global markets, just as the newly-elected populist coalition is plotting its economic course. The coalition made dramatic promises to voters that could blow past deficit targets and push Italy toward default, bailout or an exit from the euro. But despite their recklessness, the Five Star Movement and the League are more likely to moderate their economic programs — that is, if they can manage to keep their alliance together.
Italy’s new coalition – a necessary disruption?
The coalition government finally announced by Italy’s two euroskeptic parties is being bemoaned in Europe as right-wing and populist, turning Italy into a threat to the entire eurozone. But its predecessors in Rome were the ones who put the country in its current financial quandary.