CCFs and the Italian economy

Longview Economics recent report takes a deep dive into the economic impact of Italy’s proposed Fiscal Credit Certificates, which are proposed by parties representing 60% of the Italian vote. The idea is that if these parties win the election and the CCFs are approved, they will encourage greater consumer spending and corporate investment in Italy. Longview take the opposite view. They believe that if the CCFs are introduced, they will result in reduced revenues for the state and a disappointing impact on growth. With reduced revenues for the state, Italy’s already parlous fiscal situation will deteriorate, with consequently negative impacts on BTPs. Spreads of BTPs over other European government bonds are already wide and Longview expect this to worsen if the CCF plans comes into force.