1. Newsroom
  2. The Italian Referendum
Menu
Insight 05.12.2016

The Italian Referendum

The Italian Referendum

Quick comments after the results of the Italian referendum.


  • The large majority of the NO points towards early elections, before the “normal” date of Q2-2018; priority will be to rewrite the political law, to vote the 2017 budget and to continue on banks recapitalization. An interim government would probably come just in the few days after Renzi’s resignation.
     
  • A period of political uncertainty is coming back on Italy, with rising difficulties to form a government coalition or to find a clear majority. No time for the government to engage new economic reforms in front of political uncertainties.
     
  • The ECB is prepared to give liquidities if necessary and should pay attention to avoid any fragmentation or contagion effects on bond markets, using its QE or TLTRO measures. Liquidity could prevent from any systemic risk, but politics will interfere with scheduled recapitalization process of banks.
     
  • Italian growth recovery looks already fragile and its performance will probably continue to lag the eurozone.
     
  • The outlook remains limited and GDP growth should stay below 1% in 2017, as consumption stays moderate. Despite reforms in labor, unemployment rate is still high (11%) and wage growth flat.
     
  • The outlook on investment is limited and further support was expected (lower tax, incentives to innovate) from the former Renzi’s government. The political situation creates downside risks on activity in the coming quarters.
     
  • Fiscal balance has improved, and deficit is expected to stabilize around 2.5% of GDP in 2017, and public debt at 133%. A primary budget surplus exists (around 1.5% of GDP), but it looks too small to stop public debt to continue to rise.
     
  • As growth remains stuck below 1%, a strong rise in long-term interest rates will deteriorate further public financial situation and increase mechanically public debt.

GAUTRY_Patrice_UBP_72dpi-9511.jpg

Patrice Gautry 
Chief Economist 

 

Newsletter

Sign up to receive UBP’s latest news & investment insights directly in your inbox

Click and enter your email address to subscribe

Expertise

Impact investing - Creating the future now

The role of impact investing is to strive to solve the world’s most pressing problems by identifying compelling long-term investments.

Read more

Most read

Insight 15.10.2018

Global Equities: P/E de-rating in progress

Spotlight - The broad-based sell-off in global equities has fully retraced the gains made from February 2018’s lows. Even world beating technology shares have fully given up the 8% gains seen over the summer.

Insight 08.10.2018

The latest on the oil market

September saw WTI oil prices drop 4% during the first week of the month before rallying almost 12% to reach USD 75 per barrel at the beginning of October. The rally came as investors have been gauging OPEC’s ability to replace falling Iranian exports and declining Venezuelan production.
Insight 17.10.2018

Impact investing - Creating the future now

The role of impact investing is to strive to solve the world’s most pressing problems by identifying compelling long-term investments.


Further reading

Insight 13.11.2018

A bear market in crude oil: how long will it last?

Spotlight - The tailwind of tight supply that characterised the oil market in 2017 has receded in 2018.

Insight 08.11.2018

UBP Investment Outlook 2019

Opportunities and Threats in a Desynchronised World

Insight 01.11.2018

US Congressional elections - November 2018

Spotlight - US Congressional elections are set to take place on 6 November.