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Italy is plunged into a political crisis. Matteo Salvini, who blew up the ruling populist coalition on Friday, is now trying to impose early elections he hopes to win. It is launched in a marathon of meetings and meetings. This crisis is costing the country economically, Italy could enter an economic recession this year.
The statements of Matteo Salvini, the strongman of the Italian government and leader of the League, calling for early elections on Friday, had an immediate impact on the financial markets. The Milan stock market fell by nearly 2.5% with sharp declines in banking stocks.
The Italian debt has also paid the price. The ten-year borrowing rate has increased by 30 points. But Italy has a huge debt of 132% of its GDP, an important burden for the economy. The country pays in interest 65 billion euros per year, as much as the budget of the National Education.
The political crisis could provoke an economic crisis because the difficulties accumulate for the country.
The third largest economy in the euro area, Italy experienced zero growth in GDP over the first six months of the year. For the year as a whole, the European Commission's forecasts are also pessimistic. Brussels forecasts growth of only 0.1% while some experts anticipate even a recession of the economy.
In this context, unemployment which already reaches 9.7% of the active population may increase further. It concerns nearly 28% of 15-24 year olds, well above the euro area average (7.5% and 15.4%).