Only the Bond Market Can Put the Boot Into Italy
Brussels can’t do much about the coalition’s budget plans in the short term. It’s up to investors to force a rethink from Salvini and co.
Italy's populists will happily stare down the bureaucrats of Brussels, but bond investors are a whole other thing.
Photographer: Francesca Volpi/Bloomberg
The Italian government confirmed on Monday that it fully intends to stick with its aggressive budget plans, though it says it’s ready to intervene if debt or deficit ratios exceed its targets. Yields on 10-year Italian government bonds were little moved on the news as the country awaits the EU’s response.
The intransigence of Rome’s populist leaders is unlikely to impress Brussels, which has until Oct. 29 to reject the budget as non-compliant and to order revised plans. It’s likely that the EU commissioners will decide not to wait, and do exactly that at their meeting on Tuesday in Strasbourg.