BNY Mellon: Recidività

November 12, 2018

By Neil Mellor, Senior Currency Strategist, BNY Mellon

Italy is scheduled to re-submit its budget proposals tomorrow. They are going to look eerily familiar to officials in Brussels.

There has been no suggestion that Italy is prepared to modify the budget proposals that were summarily dismissed by the European Commission last month. Indeed, while the coalition has been squabbling over a variety of matters of late, on the budget, powerbrokers Di Maio and Salvini have been solid: the EU’s decision “changes nothing” said Salvini. DI Maio added "we have made commitments and we will stick [to them]".

In fact, while the implicit 1.6% difference in the 2019 deficit projections from the two camps made a satisfactory compromise for either party hard to envisage, newsflow over the past week appears to suggest that polarized positions have been further solidified, thereby rendering compromise an even more remote possibility.

Giovanni Tria’s conservative views have given Brussels every reason to regard the non-politically aligned economy minister as a ‘voice of reason’ in the Italian camp