Italy's New Government Pursues Risky Policies, Spooking Markets and Raising Fears of Debt Crisis
-
Italy's new right-wing government under Giorgia Meloni is pursuing risky fiscal policies like tax cuts and increased spending, spooking bond markets.
-
Italy's high debt levels make it vulnerable to rising interest rates. Yields have spiked, raising concerns about a debt crisis.
-
Downgrades by credit rating agencies could further destabilize Italian banks and bonds.
-
The ECB's collateral rules worsen bond market tremors, but the ECB will likely intervene if Italy nears crisis.
-
In the end the EU will bend rules to save Italy, but it may require a crisis first.
![](https://www.telegraph.co.uk/content/dam/business/2023/10/19/TELEMMGLPICT000353324401_16977391118770_trans_NvBQzQNjv4BqFmZwAHfbzbyjsBBHX-5JhxNKxCy7izpjJ_1dQZo0FM8.jpeg?impolicy=logo-overlay)