What to expect from a right-wing government in Italy

A right-wing coalition government is expected to win in the upcoming Italian elections in September. Although “euroexit” is now very unlikely, there are still some looming risks that could arise from such a government. It is not yet clear if a right-wing government will maintain a constructive approach with the EU, both in relation to the upcoming fiscal consolidation and the Recovery and Resolution Facility (RRF), of which Italy will be the main beneficiary.

What you will learn:

• Continuation of the status quo remains the easiest option.
• The next government may try to diverge from current pledges, but we expect Italy to back down after some market turbulence and maybe some minor concessions by Brussels, as has happened with previous “unorthodox” governments.
• For now, we still think that Italy will retain access to the full RRF funds, although there might be some delays in the disbursements.