Brussels has been “overly generous” to Italy’s government, allowing it to flout the EU’s budget rules last year, the head of an independent watchdog has said, fuelling criticism of the European Commission’s policing of the bloc’s public finances, the Financial Times reported. Niels Thygesen, the chair of the European Fiscal Board, told the Financial Times the European Commission had gone “beyond” the necessary flexibility allowed to Italy during the country’s budget negotiations with Brussels in 2017.

Greece’s central bank governor has blamed Italy’s market turmoil for a drop in the share prices of Greek banks, saying that the falls “are not related to the soundness of Greek banks”. Italian government bonds have seen a fresh sell-off in recent days, as investors mull the growing likelihood that Rome will face-off against Brussels over a budget-busting spending plan, the Financial Times reported. In the past two weeks the yield on 10-year Italian debt has risen by 80 basis points, to hit 3.712 per cent — its highest level since early 2014.

German carmaker Opel, owned by France’s PSA Group, said on Tuesday it would stop selling the Cascada convertible, the Adam city car and the KARL at the end of 2019, as part of a product overhaul to focus on sport-utility vehicles. The maker Opel and British Vauxhall branded cars blamed new emissions rules for the cull, but the carmaker has struggled to reach sustainable profitability after racking up more than a decade of losses selling low-margin cars under previous owner General Motors, Reuters reported.

The spread between the cost of Italian and Spanish debt is at its highest level for more than 20 years, in a sign that investors remain unconcerned about the future of the eurozone despite Italy’s spiralling bond yields, the Financial Times reported. Italy’s 10-year yield hit 3.71 per cent on Tuesday, its highest level since February 2014, after the country’s finance minister Giovanni Tria failed to alleviate growing investor jitters over its fiscal position. Short-dated bond yields also rose, although they remain below the highs they hit earlier this year.

A six-month delay in the government’s decision over the future of Alitalia would only worsen the carrier’s situation, one of the state-appointed commissioners managing the ailing airline said on Tuesday, Reuters reported. “I am not aware that there is an intention to procrastinate, but postponing a decision that must be taken one way or the other would only make problems worse,” said Luigi Gubitosi. On Saturday a government source said that Italy was working on extending by as much as six months a Dec.

A sharp fall in imports pushed Germany’s trade surplus sharply higher in August, according to new data released on Tuesday that underscore the summer slowdown in parts of the global manufacturing sector, the Financial Times reported. The trade balance reached €18.3bn in August on seasonal and calendar adjusted terms, according to the Federal Statistics Office. The jolt higher represented a bounceback from a steep fall during the previous month. Imports dropped 2.7 per cent in August from July to €92bn, while exports slipped 0.1 per cent to €110.3bn.

Italy’s finance minister has tried to stem growing concern over Italy’s budget plans as the country’s borrowing costs touched new four-year highs despite assurances that Rome wanted to calm tensions with investors and with the EU, the Financial Times reported. Speaking to Italian lawmakers, Giovanni Tria said the populist coalition would not deviate from plans to widen the country’s deficit to sharply increase spending.

Banks are partnering with alternative lenders that can offer riskier Payment In Kind (PIK) loans to smaller European companies as they battle to protect their middle market lending businesses from private debt funds, Reuters reported. European commercial banks which arrange senior loans have been losing business to alternative lenders which are able to offer unitranche loans with higher leverage. Unitranche loans combine senior and subordinated tranches of debt into a single loan at a blended cost.

History does not repeat itself, but it does rhyme. Jim Leaviss of Bond Vigilantes has dug out his missives in the months before Lehman Brothers imploded in 2008, and found some ominous similarities, the Financial Times reported in a commentary. The market was obsessing about oil prices, then on their way to $140 a barrel, while the European Central Bank was tightening monetary policy. All that is needed for a hat-trick today, says Mr Leaviss, is a “credit accident”, and for good measure, he notes that the biggest difference between then and now is the level of debt.