European Union Rejects Italy’s Budget

Photography by Jack Ward in Manarola, Italy

Italy is refusing to cooperate with the terms of the European Union for their 2019 drafted budget. Italy’s actions directly violate laws established by the European Union. The Italian government believes Italy needs to spend more than pre-determined values despite their rising debt from interest. Keep in mind Italy had negative GDP growth from 2008 to 2014.

Italian Government Officials firmly held their perspective that Italy is in need of extra financing protections. Many financial institutions have marked Italy’s bond market as “junk” based on volatile bank profits and slow growth.

The Italian government lowered interest rates to encourage mass commerce but have since started to begin raising rates again. This will cause the natural shift of the interest economy. Given recent turmoil with financial institutions in Italy, many other factors influence Italy’s ability to begin to prosper again.

Italian geography is intricate but to put things simply there are two major regions of the country. In the north reside the major industrial powers, whereas in the south the agricultural area which has recorded unusually high unemployment rates compared to other European states. Government infrastructure funding has flowed to the southern region in an attempt to restore Italian economic initiatives.

During the 1980’s Italy strengthened their budget and spending to triple their economy from 1985–1992.

I have faith that the nation will remain a power in the global economy. The oldest bank in existence is in Siena and serves as a constant reminder of the opportunities that arise when people work together to build the future. The world of finances has come a long way since then.

Financial institutions have the potential to create value for the lives of society and also is capable of creating instability across nations. The years to come will be revealing for the long-term health of Italy. If Italy is able to raise interest rates and continue positive GDP growth, this will be a good sign given their recent income levels. Their most effective route to success is by learning from their most recent market recovery. The financial systems in place need to be focused on the long-term growth of Italian productivity.

Time will tell the direction of Italy’s economy, yet one thing is certain. Italy has capitalized the least from the global growth of this decade. Spain, France & Germany have thrived in comparison. If they hope to restore the success of their economic dominance in the region they are going to have to massively restructure their government and private institutions in the north to serve the collective nation.

A compromise between the European Union and Italy will forge global mutual benefit allowing Italy’s creative venture capital and private equity firms to invest across Europe like in the early 90s. The rates that are agreed upon will play a large role in their ability to re-establish less volatile rates.