Investors today are breathing a sigh of relief after Italy reportedly bowed to European Union pressure and lowered its budget target.
What’s going on?
To say it’s been a tumultuous few days in the eurozone’s third largest economy would be somewhat of an understatement.
It all started last week, when Italy submitted its spending plans to the EU. The budget came as a shock: the country said it planned to spend a whopping 2.4% more than it makes over the next three years.
This target risked breaching EU rules. Investors balked, sending the country’s bonds higher and the euro tumbling.
At one point, the crisis was so acute that some were starting to suggest that Italy could be the next Greece.
“We have to do everything to avoid a new Greece – this time an Italy – crisis,” was the damning assessment of European Commission President Jean-Claude Juncker earlier this week.
After some bumpy back and forth, the country is reportedly backing off and cutting its budget deficit target for 2021 to 2%.
Markets have seen this before, government turmoil has jolted the country twice before in just over two years.
Source: Business Insider
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