A new crisis is brewing in Europe. Only a few months after Greece officially exited its bailout program, Italy has now become a problem for the euro area.
After a hotly contested election earlier this year, which resulted in no clear winner, the country’s coalition government has recently published a new budget that aims to meet all of its promises to voters. This means an increase in public spending. Under the new budget, Italy will experience a structural deterioration in spending of 0.8% of GDP in 2019, that’s a sharp contrast from the 0.6% improvement the country’s previous policymakers had agreed with eurozone leaders.
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