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Italian Business Confidence Falls

James Boston
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Italian Business Confidence Falls

Italian Business Confidence has undergone a moderate fall during the month of July according to the country’s National Institute of Statistics. This month’s reading is 99.7 slightly off the June number of 99.9, there was no expectation for any change on this June figure.

Italy still looks on course to post positive GDP growth this year, but only just. The International Monetary Fund (IMF) has reduced Italian growth forecasts to 0.3% for the year, this is a downward revision from the previous prediction of 0.8%. The official forecast from the Italian authorities remains at 0.7% but this is more than likely to cut in the week’s ahead.

Matteo Renzi’s Government, which currently holds the presidency of the European Union, is pushing for a relaxation of the bloc’s 3% deficit rule. Austerity measures that have had moderate success in reviving many of the Eurozone’s periphery economies are failing to provide anything other than minor growth in Italy. There are ample reforms planned for the Italian economy that would enable growth but Renzi’s government is struggling to implement these in anything other than a watered down form. Some relief from austerity would provide room for the Italian authorities to negotiate with labour unions and business interests in an effort to push through the much needed reform package.

Unlike Portugal, Greece and Ireland, who have implemented reforms with various degrees of success, the Italians have not had the cover of an EU/IMF bailout team to enable them take a hard line with certain players in the economy. It is for this reason that the EU are highly unlikely to grant a relaxation of the deficit rules to Italy on this occasion, by imposing fiscal discipline on the Italian government the EU is in effect empowering the Italian authorities with the ability to take a tougher stance towards those opposed to economic reform.

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