08.06.2018 - Studies

Italy's "government of change" and public finances out of balance

by Agnieszka Gehringer

Italy's political risk is not expected to diminish soon. The coalition of Five Stars and Lega has been revived. This means that negative prospects for Italy's public finances are once again topical.

The "government of change" is in place. After Italy’s President Sergio Mattarella had accepted the list of ministers presented to him by newly designated Prime Minister Conte on the night of 31 May, the final hurdle of the vote of confidence in Parliament was passed on 6 June.

The concerns about Italy have not diminished as a result. The reason for this is that the yellow-green coalition will most probably adhere to the "Treaty for the Government of Change" ("Contratto per il governo del cambiamento") agreed on 18 May. This has been strongly underlined in the two speeches by Prime Minister Conte in the Senate on 5 June and in the Chamber of Deputies on 6 June. The net negative fiscal effect of the treaty could amount to over 100 billion euros annually.

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