Business and financial analysis research

Italy: the new government and its severe challenges


After a period of time about impasses and negotiations, the populist and right-wing government received approval to create a government that avoid restart an election.

For domestic, the new government plans the tax cuts, promising to provide the basic income, boost pensions and benefits for the poor; it will cost government billions more euros into social policies in Italy.  Also, they decide to deport 500,000 immigrants to follow their previous party platform of election.

Recently, Italy rejects to have an agreement on the free-trade treaty called CETA between the EU and Canada due to protect its famous foods.  The CETA should be passed by the all members of EU.  This expression from Italy shows in opposition to the EU.

While Italy’s new government has arrived, it is urgent that Italy has been serious debt crisis for years.  It’s difficult for Italy to follow the strict fiscal rules in Euro because of its heavy debts.  Italian support for the single currency is the lowest among the euro-area states, the sheer size of its economy and debt offer cause for worry which it may be threaten to leave the bloc.

On the other hand, they do not take the austerity policy of EU and would like to renegotiate the debt problem in Italy with EU.  They try to revise the contract and submit the draft budget to Brussels for review.  But the debts problem of Italy is more serious than Greece.  As the euro zone’s third-largest economy, heavily indebted Italy also represents a far bigger potential threat to the single currency than the Greek economic crisis, people are worried about the economic uncertainty that lead to threats to leave the euro and return to the lira.  As far as this matter, The League and Five Star both insist that nobody thought of exiting the euro, it wasn't their manifestos.

The political situation of Italy makes strong influences on the global financial market and economics.  These major issues for Italy, we should keep watching and focusing on it, to see will new government can or can’t end these political uncertainties among these months.

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