Towards another crisis in Italy?

The economic strategy implemented by the Five Star/League coalition in Italy is mainly to boost household income by increasing the fiscal deficit. This is obviously a response to the decline in Italian’s purchasing power. But a recovery in the Italian economy will require an upturn in corporate investment, capital modernisation and improved labour force skills, all leading to an upswing in productivity, and we cannot see any of these developments at present . Moreover , market discipline is at work: an increase in the fiscal deficit leads to a marked rise in interest rates, which jeopardises the recovery in the Italian economy by weakening investment and also by jeopardising fiscal solvency. So t he Italian economy will not pick up, and this will probably lead to another political crisis in Italy.