Three More Reasons to Worry About Italy
It’s not all about Tria’s budget. There are still concerns about the coalition’s stability, the business environment and the independence of institutions.
Investors in Italy's debt are feeling good again.
Photographer: Chris RatcliffeIt feels good again to be an investor in Italian government debt. Since the start of September, the yield on the benchmark 10-year bond has fallen from 3.24 percent to 2.79 percent, and the spread with German bunds has narrowed sharply.
Bondholders seem confident that Italy’s finance minister Giovanni Tria will get his way in passing a prudent budget, despite the lavish pledges made by his government colleagues. The Five Star Movement and the League had initially promised a steep cut in income taxes, a generous income support scheme for the poor and a dramatic lowering of the pension age. They’ve toned down the promises, saying their economic program will be gradual.