New Italy Govt warned against ‘suicide mission’
BRUSSELS: Italy’s partners in the European Union lined up in Brussels yesterday to urge the new Italian Government to stick to EU budget rules or risk following Greece into financial calamity that would hurt the whole of Europe.
Arriving for a meeting of euro zone finance ministers, the hawkish Slovak representative went so far as to warn that Italy under its new eurosceptic, antiausterity coalition risked casting itself adrift from the common currency in a manner that would do severe damage across the bloc.
‘‘I sincerely hope that the new Italian Government won’t ignore rules and take euro zone hostage for the sake of preelection promises,’’ Peter Kazimir tweeted.
‘‘That would be a very risky business.’’
‘‘Should they decide otherwise and go on a ‘suicide mission’ and jump the ship instead, so be it . . . But let me be clear, you’re not alone on board of that ship.’’
Economists echoed these concerns by openly evoking the possibility of an Italian default if pledges of high spending were carried out by the forthcoming coalition government of the antiestablishment 5Star and the farright League.
‘‘If Italy were to follow through on its new plans for spending, the expected reaction among bond buyers would make it very difficult for Italy to finance its already significant amount of public debt,’’ the Brusselsbased thinktank Bruegel said in a note.
While EU partners are waiting to see exactly what policies a new government under the political unknown prime ministerdesignate Giuseppe Conte will pursue, many see private investors as the first reality test for the ruling coalition.
A policy of increased spending in explicit breach of EU fiscal rules ‘‘would likely be met by aggressive Italy underperformance versus other markets’’, investment bank J.P. Morgan said in a note for investors.