Italy won't backtrack on 2019 budget - Deputy PM Salvini

Sergio Conner
October 11, 2018

Salvini recently locked horns with Junker and Moscovici over Italy's 2019 budget deficit plans which exceed the limits set by the EU. The government is expected to submit a draft budgetary plan to the European Union commission by 15 October. When these finally appeared, some of the numbers contained in the delayed report were significantly different from those initially proposed by Salvini and his Five Star counterpart, Luigi di Maio.

The government says its expansive budget will boost growth and it has targeted output of 1.5 percent next year, which is strong by Italy's chronically sluggish standards, 1.6 percent in 2020 and 1.4 percent in 2021. The spread over those on German bonds climbed 20bps to 306bps. "Italy's 10-year rose to a 4-year high and banking stocks suffered throughout".

Local stocks fell for a third day, with the FTSE-MIB Index of shares sliding as much as 2.5% to the lowest level since April 2017.

Banks were the most hit again, with Banco BPM SpA declining 5.6% and trading in UniCredit SpA temporarily halted after falling 5%.

"Leaders Italian and French extreme right-wing and sovereignists Matteo Salvini and Marine Le Pen attacked the bunker of Brussels" by throwing together Monday in Rome of their electoral campaign for the european of may.

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The euro plummeted 0.2 percent to $1.1465, approximately to a seven-week low of $1.146 extended during the former session.

Per a report, European commissioner Pierre Moscovici expressed his discontent at the Italian government, saying "the Italian Government presented a government budget with a 2.4% deficit not only for this year but over the next three years to come which is a significant deviation to what was committed before".

"The politics of austerity of the last few years have increased Italian debt and impoverished Italy".

But a combination of a weakness in stock markets worldwide and the widening gap between core European and USA bond yields pushed investors who had bet on a fourth quarter euro rebound to dump the single currency.

"If you're an investor in dollars or another currency, the hedged yield on Italian assets is very high", head of cross-asset strategy Andrew Sheets told Bloomberg Television.

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