ECB mantle will cloak Italy’s new political crisis

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A challenge to Italy’s coalition government may make it harder to tap 200 billion euros of EU funds and hurt the country’s recovery. ECB boss Christine Lagarde’s monetary bazooka should cushion debt market jitters, for now, LJucca explains.

Former Italian Prime Minister Matteo Renzi, currently the leader of the tiny centrist Italia Viva party, withdrew on Jan. 13 his support for the government of Prime Minister Giuseppe Conte, effectively leaving the ruling coalition without a majority in parliament.

Renzi criticized Conte for his opaqueness in managing the pandemic crisis and also the government’s plans for spending over 200 billion euros of funds the European Union has allocated to Italy as part of its Next Generation EU post-pandemic recovery plan. Polls show voters’ support for Italia Viva is less than 3%, but his backing in Parliament is crucial for the survival of the government coalition.

Italy's public debt is projected to rise to as much as 170% of gross domestic product in 2021 after a 10% GDP contraction in 2020, according to Mediobanca analysts. Debt stood at around 135% of GDP in 2019.Italia Viva's leader and former Italian Prime Minister Matteo Renzi, who has threatened to sink the government by withdrawing two ministers from the cabinet, speaks during a news conference in Rome, Italy, January 13, 2021.

 

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LJucca BREAKING NEWS BEFORE IT BREAKS: Italy will default (technical) on their massive sovereign debt in 2021. MarkThePost BTP

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