Italy's government will have a tougher time convincing the EU on the budget now
If Italy's populist government is still banking on its earlier growth forecasts to push their budget deficit targets, today's set of economic growth readings pretty much throws all of that out the window.
The government's earlier forecasts were already too optimistic, truth be told, and the poor readings here suggests that the worst may be yet to come for the Italian economy and that doesn't bode well for the outlook next year. That said, this suggests that the government's forecasts detailed in the budget are now even more overly optimistic.
It is the first time since Q4 2014 that Italy's quarterly growth flat lined and this poses a real threat to there being no compromise on the budget proposal if the government continues to insist on not changing it. The risks continue to intensify for the euro and this will be yet another reason to add to the list (or at least give more backing to the current one) of headwinds for the single currency now.
