Annalisa Piazza (MFS IM) | The outcome of the Italian Presidential election (Mattarella re-elected and Draghi remaining PM) is the best-case scenario for Italy in the next 12 months. As such, BTPs should benefit from the expected stability and the integrity of the two major political figures. In the short term, we see chances of a modest tightening in spreads vs Bund. We remain relatively optimistic on Italy’s recovery story…
*This article was originally published by Fair Observer Alissa Claire Collavo | Italy’s parliament gathered in a joint session of both houses on January 24 to elect the country’s next president who will succeed Sergio Mattarella, whose term will end on February 3. A total of 1,009 voters, including 58 delegates chosen by regional councils and known as “great electors,” took part in the first stage of voting, which will be repeated every…
Crédito y Caución (Atradius) | Despite the deep economic contraction in 2020, Italian business insolvencies decreased 29% year-on-year. The decline was mainly due to a temporary bankruptcy moratorium and fiscal support. However, with the expiry of temporary adjustments to insolvency law, it is expected that business failures will increase again in H2 of 2021. Looking at the cumulative insolvency growth between 2019 and 2021, Italian business failures are forecast to increase 4%, with further rising insolvencies expected in 2022
The S&P move reduces near term risks of Italy falling below investment grade that would have had implications on BTPs holdings by real money accounts and market pricing, somehow challenging the ECB efforts to keep financing conditions under control.
“The unifying factor in the Italian coalition of two disparate political parties is firm agreement on the flaws of the EU’s deficit limits, and the risk is that any conciliation with the EU fronted by the Minister of Economy and Finances Giovanni Tria may amount to nothing more than political expedience,” commented today Neil Mellor Senior Currency Strategist at BNY Mellon.
Italy is a founding country of Europe and the euro. It has an ailing economy, which is not obvious at first sight, but its political weakness is evident. Italy is sick because of northern Europe’s austerity policies. And it can’t be expected to recover on its own because any crisis in its illness might cause the euro to take a definitive tumble.
MADRID | The Corner | Italian PM Matteo Renzi won the Parliament’s confidence vote on Italy’s labour reforms on Thursday, the most importan in his 8 months in the job. As the country’s economy has been stagnated for two decades, many wonder how far the center-left government’s plans will go. The current jobless rate of the eurozone’s third biggest economy is above 12% (44% youth unemployment). “Italy must reduce the proportion of workers on temporary contracts in the overall work force, but the details yet to be unveiled remain critical to assess whether it represents a true game-changer or not.” analysts at Barclays commented on Friday.