Rising spreadyield of Ten-year BTP to 3.34%. And the Milan Stock Exchange, the black jersey of Europe, burning 17 billion. Although the official farewell will have to wait for Wednesday 20 July, the fall of the Draghi government has already begun to cause a small storm on the markets. In which the banks pay the highest price. But the premier’s farewell to Palazzo Chigi also brings with it many unknowns about another bag: that of shopping. Because at this point it is not known what will happen to it the “full-bodied” decree which was supposed to bring a tax wedge cut equal to 100-150 euros plus in the paychecks. As well as the help on bills and gasoline. And the (announced) cuts ofVAT. While inflation continues its run. By impoverishing the wallets of the Italians.
Spread and Credit Default Swap
With order. The spread is the yield differential between Italian and German government bonds. Yesterday it closed around 220, today it is expected an even higher shot. The data is important because it defines trust in the country. And its growth is bad news. But there is also another way to assess country risk. That is to say look at the price of Credit Default Swaps (Cds). These are “insurance policies” against the (theoretical) default of a country. Explain today the sun 24 hours that exist two types of Cds: those that cover those who buy them from default and those that also cover from the risk of debt redenomination. That is, in the case of Italy, those that protect investors from a euro exit.
Yesterday, the newspaper said, both types went up. But much more the latter: the old CDs have increased the prize from 72 to 77 basis points. So today you have to pay 0.77% to insure against default risk. The new CDs, on the other hand, grew from 148 to 161. These are still limited levels. But that’s a pretty clear warning sign. Finally, the tensions on banks should be noted. Yesterday all major (Unicredit, Intesa, Mps) they lost between 7 and 5.5%. But there are those, like Bpm, who have lost 12% since Monday. This could be a sign. Given that the ECB shield is on the way, speculation on Treasury bills is complicated. The one on substitutes for country risk no.
Mortgages, inflation, bills and gasoline
Already today Italy has to suffer the inflation record. While mortgages are growing due to the increase in interest rates by the European Central Bank. At the end of the month, the government should have passed a decree with cuts to bills for the less well-off and extensions of the discount on petrol excise duties. The extension to the third quarter of so-called bonus bills recognized to the extent of 15% of the higher costs incurred by small businesses and activities they consume up to 16.5 Kw. While the cut of 30 cents per liter today it is guaranteed until 2 August. While waiting to know what will become of the government crisis, it is reasonable to expect that these deadlines will not be met. Also for the technical time necessary to eventually launch a new executive.
Then there is the cutting of the tax wedge. He should have brought between 100 and 150 euros more in the pockets of Italians. Pending the reform promised with the 2023 budget law. With the new remodeling of the wedge, the benefits would have been extended up to 35 thousand euroswith an increase in paychecks that should settle on 1,200 euros per year on average. That is about 100 euros more per month. Traces of these rules will be lost. As well as the minimum wage and the Overall Economic Treaty (Tec) which should have reduced precariousness and starvation wages.
VAT and Pnrr
Finally there are VAT and the Recovery Plan. In recent days, remember today the Rest of the Carlino, Deputy Minister of Economy Laura Castelli had said that the government intended to reduce the value added tax on goods from large retailers to meet the problems of families. The reduction of one percentage point on the ordinary and subsidized rates would have produced a saving of 4.5 billion in the purchase of assets by Italians. On the PNRR, in the first half of the year the government managed to cut 45 of the 100 goals planned for 2022. But now we should run to reach all the other objectives and arrive at December 31st with the right papers. There is in the balance a tranche of 22 billion.
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