Italy’s expansionary budget increases pressure on debt
Draghi warns government plans have tightened financial conditions for households and businesses
A higher deficit forecast included in the budget agreement unveiled by Italy’s ruling parties late on September 27 has increased pressure on the country’s sovereign debt.
The Five Star and League parties have agreed to cut taxes and increase public spending in the 2019 budget. That would entail increasing the country’s deficit to 2.4% of GDP, up from the 1.7% previously agreed with the European Commission.
Following the announcement, Italy’s bond yields rose sharply. The three-year benchmark
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