The indebtedness in Italy goes beyond the established limits twice

In recent weeks, volatility on European indices has aroused the mixed feelings of the majority of investors. Italy has struggled for several days with instability in the markets. This is due to the hot atmosphere in politics related to the elections to the European Parliament. In addition, the European Union opened an investigation into Italy's debt, which has shown that it exceeds the established standards twice. What financial and economic consequences has affected European stock exchanges?

3,5 billion dollars of punishment

The European Union is obliged to impose a penalty on the state that leads to excessive debt. In the case of Italy, it has exceeded the permitted limits twice. In theory, the sanction imposed for this offense should amount to 0,2% of GDP and would be deposited as an interest-free deposit. Quickly calculating, it would amount to 3,5 billion dollars. 

This situation may exacerbate tensions between Italy and the European Union. The arguments would sooner or later have an impact on the region's economy, among others. This is mainly about putting pressure on the euro and markets closely related to it, as well as destabilizing the Italian stock market. The FTSE MIB index since the April peak this year. has already lost 9% in total (-0,9% at yesterday's session).

FTSE MIB D1 index, source: XTB xStation

Globally, it is still unstable

The situation on the contract markets is so diverse that it is difficult to clearly assess it. Positive moods prevailed throughout the day in the US, where the stock market was gradually and confidently growing, similarly to the Polish WIG20. Despite the fact that the US-China conflict is currently the main topic in the context of destabilization and mixed market forecasts, it is also influencing them  "Smaller" events like those in Italy. The conflict of this country with the European Union seems to be a scenario that can be fulfilled. Comments of Italian politicians about refusing to accept a possible punishment cast a significant beam of light on the authorities' approach to the topic of excessive debt. Currently, markets are waiting for the official EU position in this matter.