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Outlook for Italy: Fiscal policy and instability in the government remain key sources of risk

Dennis Shen, (2019), “Outlook for Italy: Fiscal policy and instability in the government remain key sources of risk”, LSE EUROPP, 27 June

Lega finished a sizeable distance ahead of their coalition partners, the Five Star Movement, in the recent European elections. Dennis Shen writes that although Lega’s leader, Matteo Salvini, has stated he has no intention of pushing for snap elections in the short-term, the prospect of instability in the current coalition, as well as a deteriorating fiscal picture, will be closely watched by markets and credit rating agencies. Despite the markets taking recent risks in their stride with Italian yields falling to multi-month lows, Italy remains a source of instability in Europe.

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