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Italy remains defiant

November 2018

Brexit moved closer to a resolution during November as the EU and UK reached agreement on a deal; however, there are considerable doubts whether the deal will be ratified by the UK Parliament. Elsewhere, Italy’s Government refused to agree to revise a controversial budget that deviates from official guidelines and the EC described Italy’s public debt as “a major source of vulnerability for (its) economy”. 

  • The EU does not intend to renegotiate the agreed Brexit deal
  • The eurozone’s economic growth lost momentum over Q3
  • Italy may face a debt-based “Excessive Deficit Procedure”


Brexit moved closer to a resolution during November as the EU and UK reached agreement on a deal. Chief EU Negotiator Michel Barnier commented: “Globally speaking, this deal is fair and balanced”. He went on to say: “We have found a compromise to avoid a hard border between Ireland and Northern Ireland. Both sides … want to avoid using the backstop”. The EU27 leaders endorsed the withdrawal agreement and approved the political declaration on future relations; however, there are considerable doubts whether the deal will be ratified by the UK Parliament when voting takes place on 11 December. European Council (EC) President Donald Tusk warned: “If this deal is rejected in the Commons, we are left with … “no deal, or no Brexit at all”, but stressed: “The EU is prepared for every scenario.”

“Michel Barnier: “Globally speaking, this deal is fair and balanced””

Italy’s Government refused to agree to revise a controversial budget that deviates from official guidelines. The EC described Italy’s public debt as “a major source of vulnerability for (its) economy” and warned the country’s leaders that it may face a debt-based “Excessive Deficit Procedure”. The International Monetary Fund (IMF) believes that the planned stimulus measures carry “substantial downside risks” that will leave Italy very vulnerable, and expects public debt to remain at around 130% of GDP over the next three years. In an interview with the Financial Times, Italy’s deputy Prime Minister Luigi Di Maio remained upbeat, saying: “If the recipe works here, it will be said at a European level: we should apply the recipe of Italy to all other countries … “I am convinced that we can change the rules on austerity and investment”. The FTSE MIB Index rose by 0.7% during November. 

The eurozone’s economic growth continued to lose traction over the third quarter, posting annualised growth of 1.7% during the period, compared with 2.2% in the second quarter and 2.4% in the first. Germany’s economy grew by 1.1% year on year during the period. The European Commission expects the eurozone’s economy to expand by 2.1% this year, slowing to 1.9% next year and 1.7% in 2020, while Germany is predicted to expand by 1.7% this year, 1.8% next year, and 1.7% in 2020. IN comparison, Italy’s economy is forecast to grow by 1.1% this year, 1.2% next year, and 1.3% in 2020. The Dax Index fell by 1.7% over the month.


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