Italy Ex-Finance Chief Says New Leaders' Plans Hurt Economy
(Bloomberg) -- Italy’s former Finance Minister Pier Carlo Padoan warned that the new government’s goal is the dismantling of the policies that helped put the nation’s economy on a path to recovery during his tenure.
Speaking in an interview with the newspaper la Repubblica, Padoan criticized recent moves that he said punish companies for relocating, impede the fluid functioning of markets and undermine key labor reforms. He said Deputy Prime Minister Luigi Di Maio’s assertions that banks “must pay” for their arrogance have a punitive tone toward the economy.
“The risk is the increase in uncertainty, which has as a direct consequence the suspension of investment decisions just when the economy was starting to grow again,” Padoan said in reference to foreign investors’ view of Italy.
The cabinet, which was sworn in June 1, has put forward a populist agenda that also includes tax cuts and income support for the poor. It is led by Di Maio’s Five Star Movement and Matteo Salvini’s anti-immigrant League, with Giovanni Tria succeeding Padoan as finance minister.
Tria said Sunday that his aim is to “maintain market confidence and avoid instability,” speaking to reporters at the Group of 20 nations meeting in Buenos Aires.
In the interview Padoan expressed concern that Italian bond yields, which have already risen since the March elections that brought the new coalition to power, could go higher.
Italy’s 10-year bond yields rose to 3.2 percent in late May as financial markets were spooked by weeks of political uncertainty over the formation of a populist government. They have since retreated to 2.6 percent while remaining well above the 1.7 percent seen last December.
“The markets are waiting again,” Padoan told the newspaper in the interview published Sunday.
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