Giorgia Meloni will win, but “If he leaves the Draghi agenda, there will be trouble”. This is what the investment banks of the caliber of Goldman Sachs, UBS and Société Générale say, in their respective analyzes dedicated to political elections 2022 of next September 25th.
Their unequivocal messages were reported by the newspaper The Republic in‘article with a clear title: The investment banks give the victory to Meloni: “But if he leaves the Draghi agenda, there will be trouble”signed by Sara Bennewitz.
An article that is likely to rekindle and will already be rekindling the anger of the voters of Brothers of Italy by Giorgia Meloniand not only.
Many Italians had vented their anger against Goldman Sachs, for the report that had been published even before the government crisis that marked the end of the Draghi executive and the need for early elections.
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“It is essential – remarked by Goldman Sachs – assess whether the upcoming elections in the area could interrupt political continuity and prevent programs from guaranteeing growth aid – reinforced by REPowerEU and so important for debt sustainability – in Southern Europe “the analysts wrote, referring to the elections scheduled in Southern Europe, therefore also in Italy which, at the time of the report, were still scheduled for the natural expiry of the legislature, therefore for the spring of 2023.
The note read: Italy remains “The country most at risk of political discontinuity”, with the “upcoming elections that could lead market participants to find an opportunity to understand to what extent the Italian debt is sustainable “.
The realization of the PNRR ergo the agenda of Mario Draghi was the hope of the comment of Goldman Sachs.
And, a few days before the early elections, the PNRR is still confirmed as the keyword of the latest analyzes issued by Goldman Sachs, together with UBS and Société Générale.
Thus La Repubblica:
“The success of the NRP is linked to Italy’s growth prospects and the future sustainability of its debt “.
The analysts of the Swiss giant UBS wrote in particular that, in the event that the new government – which, it is recognized, will be led by the center-right headed by the Brothers of Italy (as they are called Brothers of Italy) of Giorgia Meloni should renounce to hit the objectives engraved in Mario Draghi’s PNRR, the worst scenario would materialize.
That is to say?
UBS points out that the electoral slogans of the various parties focus on the various promises of “Alleviate the pressure on the costs of households and companies”, in a context in which inflation is galloping (+ 9.1% in the Eurozone in August) and in which alerts on the advent of a recession are becoming increasingly frequent. And in a context also in which the BTP-Bund spread “Has already more than doubled”, they point out.
“The new electoral system should give the center-right coalition a majority of seats in parliament, which however will be very different from the current one. UBS estimates that the BTP, even after the elections, will travel between 200 and 250 basis points, which is a sufficient premium given the greater risk of the tricolor debt. Only if the recession were to be worse than expected, or if there was new uncertainty after the elections, could the spread reach up to 300 basis points. If, on the other hand, the new government proves its determination to keep the debt under control and execute the NRP, and the EU resolves the energy crisis, the spread could go back below 200 ”.
In short, if Meloni & Co. really want to protect Italy, they will have to comply with the letter of theMario Draghi’s agenda.
For its part, Goldman Sachs points out that, “If the electoral outcome now seems obvious (with the victory of the center right), political uncertainty remains high: the different agendas of the coalition parties, the pressures of the crisis and the limited room for maneuver in the state budget, make it impossible make an ambitious tax reform “. The victory of Giorgia Meloni, leader of FdI, is taken for granted.
Goldman Sachs points out that “From 18 August until today Giorgia Meloni’s party has gained support in the polls, and even more weight within the center-right coalition”.
Attention also arrives from the French of Société Générale. La Repubblica reports what SocGen wrote:
“For the French investment bank, the biggest question is whether and how Giorgia Meloni will continue with the work set by the Draghi government. Policy is important for debt sustainability, if the NRP was fully implemented it could revive growth by 0.6% in 10 years, which means reducing public debt by 12%, a breakthrough that would reduce the spread curve by 100. basis points. The funds of the Next Generation Eu also represent 1% of GDP by 2025 ”. Emphasizing that “Any postponement of the NRP, but also a tax reform that would cut taxes, would reduce the sustainability of the tricolor debt. The French bank expects that between now and December uncertainty will remain high and the spread will fluctuate between 260 and 300 basis points” .
Goldman Sachs returned to the Italian spotlight even a few days ago, with its report dedicated to energy crisis, complete with shock forecasts on the #carobollette #caroenergia for Italy and Europe in general.
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It must be said that Giorgia Meloni, seen as the most likely prime minister of the new government in Italy, ended up in the crosshairs not only of Goldman Sachs, UBS and SocGen but also, it should be remembered, by ECB by Christine Lagarde, which, again according to La Repubblica, would have launched an attention to the leader of the Brothers of Italy.
In referring to the euro anti-fragmentation shield, which in Italy is known as anti-spread shield saves BTP, announced by Frankfurt on 21 July, La Repubblica published the article days ago “The ECB warns Meloni: ‘An anti-spread shield only with the accounts in place’ “.
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