Leak of Italian government programme rattles financial markets

5-Star leader Luigi Di Maio

5-Star leader Luigi Di Maio

Italy's two populist leaders are brushing off fears in Brussels and the markets over the outlines of their possible government, and are insisting they are close to a deal created to help ordinary Italians.

Blunt-talking Matteo Salvini, who heads the right-wing anti-migrant League party, indicated he'd prefer to go to a new election, 10 weeks after a vote yielded political gridlock, if his forces don't get a "free hand to manage the security of Italians".

The leaders of Italy's two political upstarts, the Five Star Movement (M5S) and the League, say they have agreed on the final draft of a contract that lays out their vision for a "government of change". Both groups have a history of euroscepticism.

If you think Brexit is a headache for the European Union, just look at Italy's new government. Late on Tuesday, a draft coalition programme leaked.

A new statement confirmed the new potential coalition had decided "not to call into question the single currency".

Sofia Declaration: The Future of the Western Balkans is European
At the EU-West Balkans Summit, state leaders will hold talks on common interest themes like connectivity, security and migration. The declaration says, in part: "the EU reaffirms its unequivocal support for the European perspective of the Western Balkans".

Italy's populist leaders sealed a coalition agreement, marking a radical rupture with an establishment that has overseen decades of stagnation in the euro area's third-largest economy.

However the League-Five Star document appears to espouse a protectionist stance.

Italy's debt is already the second-largest among European Union countries, at 130 percent of GDP, and the European Union has been calling on the country to continue putting its finances in order.

But that relaxed attitude could change if a populist government in Rome were to start a serious attempt to implement its vision for a return to the pre-Maastricht days.

In calculating debt as a proportion of gross domestic product - Italy's ratio of 130pc is second only to Greece in Europe - the draft accord proposes discounting hundreds of billion euros in Italian debt purchased by the European Central Bank under the bank's quantitative easing programme.

NAFTA countries to hold high-level talks over pact's future
For the auto industry, which has argued against sweeping changes, the failure to reach agreement will likely be met with a sigh of relief although the battle over NAFTA will continue.

"The leak is a watershed in the external perception of what an anti-establishment government may mean".

The pan-European FTSEurofirst 300 stock index rose 0.62 percent, while Italy's benchmark index bounced 0.3 percent following heavy losses on Wednesday on concerns that a new government could relax fiscal discipline.

Despite Borghi's comments, Italy's five-year credit default swaps were up 5 basis points to their highest levels since the end of March. However the League still wants to leave the euro zone as soon as is politically feasible. Di Maio told reporters in parliament "the recipe to lower public debt is by investments and expansionary policies".

Both leaders said the final policy document would be put to their voters before being submitted to the president, Sergio Mattarella, who has the final say on the contract, prime minister and cabinet lineup. But with Italy's public debt at more than 130% of GDP, the measures will be hard to achieve, undoubtedly leading to clashes with the EU.

And while Di Maio wants to introduce a national minimum income, Salvini is pushing for a flat tax to reduce middle class's taxation.

Martial, Payet, Lacazette & Coman out of France squad
His team-mate Florian Thauvin, who has excelled at Marseille after an unhappy spell at Newcastle, is in the squad. But as it is muscular, there is a significant risk of further issues.

"They are preparing excuses if they can not maintain all their promises, so they want to unleash a battle against the European Union", said Andrea Romano, a lawmaker from the centre-left Democratic party.

Latest News