German economy looks concerned at Italy election

Giorgia Meloni

Election in Italy: The right-wing alliance with the post-fascist Giorgia Meloni and the center-left party (PD) and the 5-star movement are politically far apart.

(Photo: AP)

Berlin The German economy looks with concern at the parliamentary elections on Sunday in the highly indebted Italy. "Unfortunately, Italy is in danger of slipping unchecked into a new phase of political instability," said the president of the family business, Reinhold von Eben-Worlée, on Thursday to the Reuters news agency.

"This is poison for the highly indebted country with its great economic output.Instead of advocating a long overdue modernization of the administrative and state apparatus, no party is trying to get off the high state spending on credit.

"On the contrary: the blame for the state's misery continues to be wrongly dumped on Europe," said von Eben-Worlée. "Worse still: new spending programs are even being promised." The reaction of the financial markets will not be long in coming. They would further downgrade Italy, because the increasing dependence on the questionable financing by the European Central Bank (ECB) be obvious.

The Association of German Chambers of Industry and Commerce (DIHK) is also critical of the debt of the Italian state. "The danger is that heavily indebted countries such as Italy or Greece already have to pay significantly higher interest rates for new debts," said Volker Treier, DIHK foreign trade chief.

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“And the interest burden is likely to increase further in the coming years. That can quickly become a stumbling block for economic development in the euro zone and thus for important markets for German companies.” More than half of the German trade volume can be traced back to exports and imports with EU member states.

Parties make expensive promises

It is all the more important that the member states use the funds made available with the recovery fund after the Corona crisis for important structural reforms and thus to strengthen their potential economic growth.

The legal alliance with the post-fascist Giorgia Melonithe Center-Left Party (PD) and the 5 Star Movement are politically far apart, but they also have one thing in common: all three camps have promised expensive gifts.

They range from tax cuts to higher salaries for civil servants, earlier retirement dates and a “dowry” of up to €10,000 for teenagers once they turn 18. After Greece, Italy is the most heavily indebted euro country: liabilities account for around 150 percent of economic output. Borrowing costs have already risen significantly - driven by rapidly rising inflation, the turnaround in interest rates ECB and political uncertainty.

Data from S&P Global Market Intelligence shows that investors' bets against the Italian government bond market have reached their highest levels since 2008. This is a sign of growing unrest among investors.

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