Italy's prime minister and economy minister have formed an unofficial allia...
ROME - Italy’s prime minister and economy minister have formed an unofficial alliance with the president to prevent the euro zone’s third-largest economy being dragged into financial crisis by its ruling parties, sources say.
The coalition’s confrontation with the European Commission, which has flagged possible disciplinary action over Rome’s big-spending fiscal policies, has sent a shiver through Italian bonds and rekindled fears of a full-blown financial crisis.
The League, rooted in rich northern regions, and 5-Star, whose voters mainly live in the poorer south, forged their alliance a year ago, but last month’s European Parliament elections have given Salvini the upper hand. The fact that Italian debt continues to rise as a proportion of GDP prompted the European Commission on Wednesday to start a process that could lead to financial sanctions and stricter oversight of fiscal policy.Investors are already asking for interest rates some 0.7 percentage points higher than a year ago to buying Italian 10-year sovereign bonds.
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