Italian Debt Worries Financial Markets

ArticleDebt crisis June 7, 2018 - 9:16:24 AM

The coalition regime and the decisions of this new Italian government worry the markets and the European Union.

The recently elected Prime Minister Giuseppe Conte, recalled parliament that the coalition government he leads that relations with partners in the euro area and markets are under pressure. Conte announced the implementation of a tax cut for businesses and individuals up to 15% but also extend social benefits to the poor and unemployed in the country.

These decisions are valued at about 70 billion euros (82.1 billion dollars), which is equal to 4% of GDP. This will not fix the ratio of public debt to gross domestic product at 180% in 2030, against 132% in 2017.

Because of internal political conflict's fear leading to new elections leading to a referendum on Italy's independence . This turbulence propagated to financial markets world, triggering a short-term sale of equities that also led to a decline in U.S. equities. Ultimately, it could all depend on how Italian voters react to a confrontation between Rome and Brussels...


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