The anti-spread shield has a very high price for our country.
Let’s see what’s going on. The European Central Bank is working on an anti-spread shield to prevent the differential from penalizing Italy too much.
But Germany is afraid that countries with high deficits like Italy so they are encouraged to spend without restraint.
Germany says no
That’s why you work at clauses that in fact can plunge Italy into severe austerity.
The problem is that this strong austerity on the one hand serves to satisfy the most virtuous countries as regards the deficit, but it comes precisely at a time when Italy needs to provide strong public aid to too many families in difficulty. In fact, with inflation at its peak and an increasingly poor labor market, the Government is called upon to provide extraordinary aid. However the ECB has reassured the Germans that the shield against the spread it will have very clear clauses that will prevent Italy and other high-deficit countries from continuing to spend.
Hard clauses for Italy
As we know the high inflation has forced central banks to a sharp rise in rates. As for the ECB, the rate hike for now has been more promised than it is achieved. But this was enough to alarm the markets and increase the spread tremendously. The rate hike wanted by the European Central Bank and the Federal Reserve seriously threatens to collapse stock exchanges and send the world in economic recession. Yet with such strong inflation, raising rates is unfortunately an inevitable path.
The government forced to cut
It is precisely for this reason that the increase in rates was thought to also accompany a shield against the spread. But of course the countries “Virtuosos” like Germany disagree and therefore the long-term effect of all this it can seriously be an austerity that risks preventing the government from helping those in need. This repeats the old problem of forced coexistence in Europe between countries that are really too different in economic terms.
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