Fitch confirms Italy's rating and hopes a stable government

• Government crisis, clash on the date of the elections. Battle on no confidence motions
• The League presents to the Senate a motion of no confidence in Conte. M5S attacks Salvini: "Giullare"
• Black Friday for Piazza Affari and for the spread
• Here is the text of the League's no-confidence motion
• Government, Count to Salvini: "In the House will have to explain the reasons for the crisis"

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The day after the opening of the government crisis, Fitch's pronouncement was much awaited. For the second time, the international rating agency confirmed Italy's 'report card', assigning it the 'BBB' grade. The outlook is also confirmed as "negative": to weigh, "the high level of public debt", weak growth and "the growing uncertainty" linked to the current political dynamic.

In reality, the international rating agency suggests that the current judgment already discounted the possibility that the government would not last throughout the legislature. "This week's political developments reinforce our" previously made assessment that "the government could not have fulfilled a full mandate" with the "growing risk of early elections starting in the second half of this year".

Having said this, Fitch expects that in any case no safeguard clause will be triggered and that therefore there will be no VAT increase, while a "flat tax" rate of 15% will be introduced which "is in the League's program", and which "could be limited to annual incomes below 50,000 euros with a cost of around 0.6% -0.7% of GDP".

Experts say they expect "this will only be partially offset by the savings resulting from the spending review and the review of tax cuts. About the latter, Fitch warns, their review will be "politically difficult". And in any case, despite the delicate situation, Fitch does not seem pessimistic about our future, especially if in the case of elections, there is a more stable government in the presence of which "we see a moderate upside potential of medium-term debt sustainability".

On the day when the spread then flew at 240 points, at five-week highs and with the most important daily increase since May 2018, Fitch emphasizes that thanks to the ECB's accommodating policy, the sentiment of bond markets vis-à-vis Italy " has improved". But, it is his warning, the government that will come will not think of departing from the EU budget rules. At that point, it will be inevitable to face the "instability" of the markets. And the markets, we know, are not forgiving.