Italy

Brussels has sent a letter warning Italy’s populist government over its rising debt levels, setting up a fresh clash between the EU and Rome less than week after European elections, the Financial Times reported. The European Commission on Wednesday wrote to Italy’s finance ministry asking for an explanation on the country’s deteriorating debt situation.

Matteo Salvini has called for a “fiscal shock” of tax cuts in Italy as he exerts his political influence after a resounding victory in the European elections, but Brussels is preparing to hit back over Rome’s budget plans, the Financial Times reported. Italy’s deputy prime minister and leader of the anti-immigration League party said that Italy “must lower taxes”. “We need a Trump cure, an Orban cure, a positive fiscal shock to restart the country,” Mr Salvini said in a radio interview on Tuesday.

Economists in Milan and London are debating whether Italy is carrying so much debt that it might collapse into a Greek-style financial crisis, Business Insider reported. Their fear is that because Italy is so much bigger than Greece — and because Italy is one of the Big Three economies underpinning the eurozone — that the scale of such a crisis might be more difficult to contain this time around.

Italian prosecutors have opened an investigation into corruption allegations against a junior transport minister who serves as economic adviser to Deputy Prime Minister Matteo Salvini, judicial sources said on Thursday, Reuters reported. Armando Siri, a prominent member of the right-wing League party, is suspected by prosecutors of taking bribes to help companies operating in the renewable energy sector, the sources said. Siri did not respond to requests from Reuters for comment, but was quoted by Italian newspapers as denying all wrongdoing.

Italy’s Supreme Court has rejected an appeal by Parmalat against a lower court ruling that it pay $431 million in damages to Citibank in a case stemming from the dairy group’s bankruptcy more than 15 years ago, Reuters reported. Reuters reviewed a copy of the Supreme Court’s decision on Monday. Parmalat, now owned by France’s Lactalis, collapsed in 2003 after the discovery of a 14 billion euro ($15.8 billion) hole in its accounts.

A proliferation of words for snow reflects the exceptional environment in which Inuit people survive. It is the same for Italian bankers, who have numerous terms for lousy loans, the Financial Times reported. Of these “unlikely to pay” is the most intriguing, implying a default may be a lifestyle choice as valid as designer spectacle frames. The category, worth about €83bn in outstanding loans, has also piqued the interest of foreign investors, including Bain, Bayview and Algebris. If they buy the debt, there could be a return in it. Everyone could end up better off.

BNP Paribas on Wednesday denied having sued Astaldi, adding that it was the Italian builder that had launched legal action against the French lender on March 13, Reuters reported. The bank said it and other lenders were sued by Astaldi over the payment of an international guarantee issued by BNP Paribas at the request of the Italian group in favour of National Bank of Canada. The legal move was “totally groundless”, BNP added. Earlier on Wednesday, Italian daily Il Messaggero reported that BNP had sued Astaldi over an alleged breach of a contract in Canada, complicating its rescue plan.

Italy’s populist coalition government has formally conceded that economic growth will be sharply lower this year than it had previously forecast, underlining its struggle to reconcile plans for higher public spending with a stubbornly slow domestic economy, the Financial Times reported. Following a meeting of ministers on Tuesday, the Italian government approved an updated budget plan that forecasts gross domestic product will be 0.2 per cent in 2019, bringing its estimates closer in line with the expectations of the IMF and vast majority of private sector economists.

An Italian government scheme to reimburse shareholders of failed lenders damages the credibility of European Union rules on bank rescues, a leading EU lawmaker said on Tuesday, urging Brussels to block the plan, Reuters reported. The government agreed a plan on Monday with investors’ associations to use taxpayers’ money to compensate the shareholders and bondholders of six small banks that went bust over the last four years.

The Italian government and the European Commission have reached a provisional agreement to reimburse some investors who bought shares in failed banks, an Italian official said, in an unprecedented move that would soften EU rules on bank rescues, Reuters reported. The bail-in rules devised after the last decade’s financial crisis were designed to make any given bank and its creditors - instead of taxpayers - financially responsible if it went bust, with shareholders first in line to pay up.