ASSESSMENTS

Italy and Spain Rattle the Eurozone

May 29, 2018 | 19:22 GMT

An Italian police officer in riot gear watches an anti-fascist counterdemonstration against a far-right meeting.

(PIERO CRUCIATTI/AFP/Getty Images)

Highlights

Italy's political crisis has deepened, significantly increasing the likelihood that another round of elections will be held soon. Should that happen, Euroskeptic parties will likely perform strongly again.
In Spain, the government faces a vote of no confidence. Even if it manages to stay in power, the minority government in Madrid will be increasingly ineffective.
While Euroskeptic politics in Italy represent a much more urgent threat to the eurozone than those in Spain, the countries using the currency are so deeply interconnected that financial risk from either country could easily spread.

Political turmoil has returned to Southern Europe. The governments of Italy and Spain are facing crises that raise questions about the future of much-needed economic and institutional reforms and that could lead to early elections. In Italy, the country's continued use of the euro could be under threat. Because of these concerns, the second half of 2018 will be filled with economic uncertainty for the two countries, which are the eurozone's third and fourth largest economies, respectively....

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