Italy’s debt is currently weighing heavily on the euro, with national debt second only to Greece.

Giovanni Tria, Italy’s Finance Minister, believes investor confidence is the biggest problem facing Italy. The third largest economy in the bloc has struggled to convince investors that its economy is on a sustainable economic path. Since the anti-establishment Government came into office in June last year concerns have risen over the Country’s ability to pay back its debts.

Currency Pair% Change in 1 monthDifference on £200,000
GBPEUR3.38%€7,680

The concern is due to the increase in public spending by the new coalition. Italy is at around 130% of debt to GDP.

Tria has stated the following on the situationI think investor confidence is Italy’s biggest problem. But confidence can be restored,”

“I see a lot of international appreciation for Italy’s industrial system and for our economy. We need to boost our own domestic morale even in the short-term, but I think that our basis is very strong,”

The IFO institute last month displayed data showing that investor sentiment dropped to its lowest level in four years. Out of the eight countries that were analysed within the bloc Italy had the weakest level of economic climate.

Italy also fell into recession in Quarter four of 2018. The current situation in Italy does not bode well for the euro.

Eurozone GDP

Eurozone GDP

Today we will see the release of Eurozone Gross Domestic Product (GDP) data and the release will be keenly watched by investors. This GDP release has particular importance due to the recent below par data releases from within the Bloc.

Quarter on Quarter data is set to land with little change at 0.2% and Year on Year figures are also set for little movement and are due to land at 1.2%.

European Central Bank Interest Rate Decision

Later today we will also see the European Central Bank (ECB) Interest Rate decision. The majority are not expecting a change, as it is already at 0% and there could be little justification for a hike.

It will be interesting to see how ECB President Mario Draghi handles the press conference following the decision. Quantitative Easing (QE) has recently been brought to an end, which some consider was premature. It may be the case that we could be looking at QE being reintroduced or at least hinted at. This could cause volatility in the markets.

 

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