Italy economy

Italy faces penalty

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The European Commission is likely to start disciplinary procedures against Italy for breaking EU debt rules, according to reports.

According to Bloomberg, Italy could face a €3.5bn (£3bn) penalty for breaching rules which require countries to keep their deficit below 3% of GDP and debt under 60% of GDP. Italy’s debt is more than twice the EU limit.

Italy's stock market is down 0.6% while yields on Italian bonds rose and widened the gap with German bonds, as shown in the image above tweeted by a journalist at Die Welt.

Italy emerges from recession

A meagre 0.2% growth rate in the first three months of 2019 marks the end of a technical recession in Italy.

Paolo Pizzoli, an economist at ING, says that while the preliminary figure is encouraging, "manufacturing order book data remains volatile."

Unemployment in Europe's fourth largest economy also declined in March, by 0.8%, when compared with the same month in 2018.

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French, Germany and Italian economy

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Howard Archer is chief economic adviser to the EY Item Club of economic forecasters.

French PMI data is also out saying that the services measure fell in March to 49.1 from 50.2 in February - this is better than a preliminary reading of 48.7. A reading below 50 indicates contraction.

Mr Archer also tweeted about Germany.

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IMF warning on Italy dismissed as not credible

Luigi Di Maio
EPA
Luigi Di Maio attacked the IMF report

Economic policies implemented by the populist government in Rome make Italy vulnerable to a crisis of market confidence, with the poorest likely to suffer the most, the International Monetary Fund has warned.

"The authorities' policies could leave Italy vulnerable to a renewed loss of market confidence," an IMF annual report on the country says.

"Italy could then be forced into a notable fiscal contraction, pushing a weakening economy into a recession. The burden would fall disproportionately on the vulnerable."

On January 31, official data showed that the Italian economy, the eurozone's third largest, contracted in the fourth quarter of 2018, which meant the country was in a technical recession.

But Italy's deputy prime minister and M5S leader Luigi Di Maio quickly rejected the report, saying the IMF "has starved people for decades" and lacked the credibility to attack policies.

Italy recession reflects eurozone weakness

Andrew Walker

World Service economics correspondent

Factory worker
Getty Images

Italy has a long standing problem of weak economic growth.

The economy is still 5% smaller than it was at the peak before the global recession a decade ago.

The renewed downturn partly reflects wider problems across Europe.

The Eurozone has managed continued growth, but it has been weak- 0.2% in the final three months of 2018, according to figures which have just been published.

The region's industry has been affected by global trade tensions and slowing growth in China.

These developments have had an impact in Germany, the Eurozone's biggest exporter.