Infographics: How Italy’s budget woes could escalate

Published On: October 28, 2018 12:05 AM NPT By: Republica  | @RepublicaNepal

Brussels has rejected Italy’s 2019 budget, setting its governing coalition on a collision course with the commission. Rome has three weeks to submit a new spending plan or face millions of euros in fines. Writing in the New York Times, Jack Ewing, an economics and monetary policy expert, warns of dire consequences when interest rates spike and investors lose confidence in a country’s ability to pay its debts. Last week, Moody’s Investors Service downgraded its rating of Italian debt to one notch above the level where it would no longer be considered investment grade — in plain language, “junk.” If the tension between Italy’s populist government and the European Commission continues, there is a good chance that Standard & Poor’s will follow Moody’s lead, putting pressure on the other two leading rating agencies -- Fitch and DBRS -- to do the same, pushing Rome over the cliff to the junk abyss. 

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