The Italian economy has again been doing less than stellar. Partly due to the fact that they cannot agree on a government for more than about two years, but also due to the deep connections between Italy's economy and that of Germany. The most recent government's budget failed to meet the requirements set forth by the EU, and increased enmity towards Brussels ended up causing government borrowing costs to rise.
Both the internal and external problems tend to have the same result, delayed spending, a decrease in investment, and shaky household confidence in the economy. With a public debt currently representing 132% of the GDP, all Italy can do, according to The Economist, is convince Brussels that more spending is necessary to help the economy grow.
https://www.economist.com/finance-and-economics/2019/02/02/italys-slump-reflects-trouble-both-at-home-and-abroad
1 comment:
This seems to be the case of E.U. Bueraucrats wanting to continue to hold onto power in order to keep one of the "PIGS" in check. While Brussels is certainly right that in the long run Italian Public Finances must change, the Italian government is right in the sense that Austerity will not lead to short term economic stimulation. The Italian government may need to seek a compromise of tax cuts to encourage business investment as well as the modification of the welfare state to have more automatic transfer programs, similar to an unemployment insurance, but agree to changes in how public sector pensions and state run defined benefit programs operate.
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