At the end of the year’s press conference, the Italian Prime Minister answers questions.
Alessandra Bennetti – Corbis | Corbis News | Getty Images
Italy is on the verge of another political crisis as members of the coalition government question the Prime Minister’s plan for the country’s economic recovery.
The southern European nation is no stranger to political conflicts; Since World War II, over 60 governments formed due to tensions, scandals and small-scale incidents. However, the latest political controversy is coming at a particularly painful moment, with the number of coronovirus infections and deaths among Europe’s highest to date and its GDP is predicted to shrink by about 10% in 2020.
“In the most likely scenario, the crisis will lead to the formation of a new executive,” Wolfango Piccoli, co-chairman of consulting firm Tenno, said in a note on Monday.
Prime Minister Giuseppe Conte has been in power since June 2018, but he is already heading his second government, which ended in the summer of 2019 with a political dispute as well as a new coalition, which the Left Democratic Party and The Five Star Movement was made up of another left-leaning party, Sarkar.
Gordian Knot How to spend EU funds and write them for new or already existing projects.
Alberto Alemano
Professor of HEC Business School
The latest challenge brings Conte without political affiliation, against former Prime Minister Mateo Renzi, who defeated the Democratic Party in September and formed his own group called Italia Waiva, which supports the coalition and holds two ministerial positions. Renzi, however, threatened to withdraw his support for the current executive, arguing that Conte’s plans for economic reform were not ambitious enough.
The European Union agreed to tap financial markets in the quest for 750 billion euros ($ 920 billion), which will be invested in 27 countries to help revive their economies after the coronavirus virus epidemic.
Italy is one of the main beneficiaries of these funds, which is expecting around 208 billion euros in grants and low-interest loans. However, the challenge is how to make the most of this money that Italy has the second largest public debt pile in the European Union and its economy was already struggling with the epidemic.
“Gordian is not aware of how to spend EU funds and whether to include them in new or already ongoing projects. While the former will increase Italian record high public debt, the latter will reduce the positive impact of EU financial support . ” Alemano, an EU law professor at HEC Paris Business School, told CNBC on Tuesday.
Experts such as Tenno’s Piccoli believe the dispute “will come to light later this week when Conte presents his revised economic reform plan to the cabinet for approval. Trigger for formal opening of crisis The refusal by two ministers of Italia Viva can be done.” To support the plan. “
He said that in the ruling coalition, Italia Vivarayu is only a junior partner, the numbers in Parliament, especially in the Senate, are so stringent that withdrawing its support may trigger the Prime Minister’s vote of confidence.
Ignazio Corrao, an independent Italian lawmaker in the European Parliament, told CNBC on Tuesday that a snap election was likely to be avoided and there would be either a new prime minister or a cabinet reshuffle.
Renji said that he needs to use all political means in the future … so that the powers gain in the future, suggesting political controversy could be a strategy for the recently established Italia Viva Party to gain more ground is.
The yield on 1021 Italian bonds has increased slightly this week, as markets opened for the first trading days of 2021 and on the back of the political situation. However, due to the huge amount of monetary and fiscal stimulus in Europe, the yield is still trading at a low level at around 0.532%.
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