On September 27, 2018, Susannah Streeter of the BBC’s World Business Report interviewed Mahanakorn Partners Group Chairman and CEO, Mr. Luca Bernardinetti, on the eve of the announcement of Italy’s first budget under the Five Star Movement/The League coalition. The situation was tense, as any budget deemed satisfactory to the coalition partners would risk violation of European Union budget guidelines.
After Ms. Streeter set the scene, Mr. Bernardinetti outlined the trends that had taken Italy to its current, dangerous, fiscal position and what might be expected if the budget involves a debt to GDP ratio outside of the EU prescribed parameters. Bernardinetti, referring to European Central Bank President, Mario Draghi’s recent comment that flouting the EU budget guidelines, would likely result in an upsurge in borrowing costs for Italian households, predicted an upturn in bond yields, putting Italy’s banks, the holders of 20% of government debt, at further risk.
Both Streeter and Bernardinetti discussed the central figure in the drama, unaffiliated, Economy and Finance Minister, Giovanni Tria, who found himself having to help the coalition partners keep their expensive campaign promises while preparing a budget that would not irk the European Union.