Italy: Government gambling with the economy – Nordea Markets

According to analysts at Nordea Markets, Italy’s current government programme does not include any of the reforms needed to lift country’s low potential growth rate.

Key Quotes

“We do see some potential in the citizenship income and the tax changes planned by the government, but implementation remains key and these reforms risk being undermined by continued weak confidence.”

“Further, banking sector worries have not been resolved, while the possibility of early elections cannot be excluded, as the two governing parties, M5S and the Northern League, are far from cohesive ideologically.”

“Until the structural weaknesses are addressed, the Italian economy remains stuck at low growth rates. Any boost coming from a looser fiscal policy compared to last year will probably be more than offset by increased uncertainty and lower confidence.”