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Italian Deputy Prime Minister and Minister of Economic Development Luigi Di Maio, Prime Minister, Giuseppe Conte, and Deputy Prime Minister and Interior Minister Matteo Salvini, hold a press conference in Rome on the country’s draft budget

The Italian challenge

Italy’s leaders, including Prime Minister Giuseppe Conte (C) are in a standoff with the European Union over the country’s draft budget (source: dpa)

General info

Location
Italy
Date
30 October 2018
Contains
Report Scenarios
Category
Economic trends
Tags
European Central Bank European Union fiscal policy Italy populism public debt

Author

Professor Enrico Colombatto

Professor Enrico Colombatto

Enrico Colombatto is a professor of economics at the University of Turin, Italy. He is also director of research at the Institut de Recherches Economiques et Fiscales (IREF) in Paris. Among his other current positions and affiliations are: member of ...
  • Italy’s financial problems are less dramatic than they seem
  • The real problem is that EU policies have encouraged member states’ profligacy
  • Rome’s fight with Brussels challenges the EU’s ability to continue such policies

Italy’s new government continues to send ripples throughout the European Union and financial markets. At first blush, it is doing nothing dramatic. According to the government’s initial announcements, in 2019 the budget deficit should reach 2.4 percent of gross domestic product (GDP), as opposed to 1.6 percent (the previous figure accepted by Brussels) and to 2.0 percent (the expected figure). Although the revised level is higher than one would want, it is no foretaste of financial disaster, even considering Italy’s high public debt (133 percent of GDP) and its low growth rate (1.2 percent in 2018). Yet, market players have been taken by surprise and the EU authorities have bitingly complained.

Contents

  • Lack of legitimacy
  • ‘Do nothing’
  • EU: pull back or push forward?
  • New leaders needed
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Professor Enrico Colombatto
The difference between trouble and disaster will depend on the quality of the leaders in Rome and Brussels
read more about it in the report
What's inside
  • Italy’s financial problems are less dramatic than they seem
  • The real problem is that EU policies have encouraged member states’ profligacy
  • Rome’s fight with Brussels challenges the EU’s ability to continue such policies
Who will benefit?
  • Report is targeted to the decision makers in cross country manufacturing – suppliers, manufacturers, logistics.
  • Also considered useful for the administrative university facilities, to better understand the possible effects of current decisions.

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