Fantasia Italiana

13 January 2021 By Lisa Jucca Follow @LJucca

The country’s government is collapsing amid internal squabbling. That may complicate tapping some 200 bln euros of EU funds, hurting the recovery, or even lead to messy elections. Central bank boss Christine Lagarde’s monetary bazooka should cushion debt market jitters, for now.

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Former Italian Prime Minister Matteo Renzi, currently the leader of the tiny centrist Italia Viva party, withdrew on Jan. 13 his support for the government of Prime Minister Giuseppe Conte, effectively leaving the ruling coalition without a majority in parliament.

Renzi criticized Conte for his opaqueness in managing the pandemic crisis and also the government’s plans for spending over 200 billion euros of funds the European Union has allocated to Italy as part of its Next Generation EU post-pandemic recovery plan.

Polls show voters’ support for Italia Viva is less than 3%, but his backing in Parliament is crucial for the survival of the government coalition.

Italy's public debt is projected to rise to as much as 170% of gross domestic product in 2021 after a 10% GDP contraction in 2020, according to Mediobanca analysts. Debt stood at around 135% of GDP in 2019.

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Italy gives sovereign debt revolution a nudge

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Polls show voters’ support for Italia Viva is less than 3%, but his backing in Parliament is crucial for the survival of the government coalition.

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