Italy: Testing the limits – Nordea Markets

Analysts at Nordea Markets note that the Italian administration is yet to soften up on the 2019 budget, which will be delivered to Brussels by Monday 15 October.

Key Quotes

“All signals suggest that the 2019 budget proposal will be kept exactly as it is now. A 2.4% deficit for 2019, and then the Italian administration can soften the stance after the European parliamentary election in the spring. Matteo Salvini said this week “we won’t take even a cent of a euro off the measures we have prepared for the Italians” – the words of a politician who is campaigning.”

“The news flow has not worsened this week, why the EUR has regained its footing despite slightly wider Ital-German spreads. We took a deep look at the Italian debt sustainability this week, concluding that the Italians have some buffer left, but not a lot.”