Moody's with their take on the Italy vs European Commission situation
- Skeptical that the threat of EU fines will be an "effective incentive" for Italy
- Expects Italian public debt to continue to rise in the coming years
- Says that absence of credible strategy continues to expose Italy to adverse shifts in investor sentiment
- Believes that Italy's 2020 budget will be an important milestone in assessing the direction of the country's creditworthiness
Yup, there's highly any doubt that Italy will not back down against the European Commission so long as the coalition government remains in charge. I reckon the government will be more open to adjusting their policies if financial markets punish Italian assets in the manner that we saw last year. Otherwise, it's hard to imagine them caving to the commission's demands.
The bright side here is that Moody's didn't mention anything on downgrading Italy's credit rating or outlook, which it reaffirmed at Baa3 with a stable outlook back in March.