Will a key measure of Italian political risk continue to decline?
The prospect of Mario Draghi, former president of the European Central Bank, taking over as head of Italy’s government, has propelled a key measure of political risk on the continent to its lowest point in five years.
The additional yield demanded on Italy’s 10-year debt compared to its ultra-safe German counterpart fell below 1 percentage point last week. It is down from more than 3 percentage points at the end of 2018, when a populist government in Rome clashed in Brussels over fiscal rules.
Analysts believe forming a unity government led by Draghi with a strong parliamentary majority could see more investors flocking into Italian bonds, pushing yields further lower.
The country’s share in the EU’s stimulus fund could be more reassured for investors. Italy is the largest gross recipient of the 750 billion euros available, but it has yet to finalize a plan on how to spend that money.
“Draghi’s real advantage comes from his relationship with his peers in the EU and his qualification to draft Italy’s stimulus package,” said Nicola Nobile, Italian chief economist at Oxford Economics.
A Draghi-driven …
Check Additional From Source
Copyright @ www.ft.com
News Highlights Politics
- Headline: Will a key measure of Italian political risk continue to decline?
- Check all news and articles from the Politics news updates.
