Euro Watch: A conflict of interest emerging between ECB and Italy
We have recently started to shed some light on who we believe might be Europe’s canary in the coalmine: Italy. The boot-shaped, pasta-loving country might be a prime destination for the summer vacation, but things are not looking bright for Meloni when looking under the hood.
Italy is by far (only succeeded by Greece) the European country with the most public debt, bringing a hot 147,3% Debt to GDP ratio to the table. And when being a net borrower (which only has gotten worse after the pandemic), tight monetary policy is not the medicine you need.
Chart 1: The Italian government funds itself heavily with debt