Italy has a significant debt problem. The EU is telling the country to take significant actions to fix it, but Italy is resisting. This article describes the back and forth.
The issue will be significant over the next 12 to 18 months. Italy is a much larger economy and has a lot more debt than Greece when it had the big debt problem a couple of years ago. Also, the Italian debt is widely held around Europe. Defaults could damage many balance sheets and harm the economy. It will be a while before the problem comes to a head, but investors need to monitor it.
Italy’s leaders have until Nov. 13 to submit revised spending plans after the European Commission took the unprecedented step of rejecting initial proposals to widen the deficit. Deputy Prime Minister Luigi Di Maio said in an interview with the Financial Times that the government’s plans would not change.
The commission will propose disciplining Italy on Nov. 21, Politico reported Monday, citing three unidentified people involved in the talks in Rome and Brussels. It may base its recommendations on the country’s debt — which is equivalent to 130 percent of economic output — rather than next year’s target deficit that could help speed up proceedings, the report said.