Stock markets have fallen around the world as traders get jittery over the unclear outcome of the Italian Elections. After a brief respite where it was hoped Europe was on the mend worries about the financial health of the Eurozone have flooded back.
Paul Mortimer-Lee, global Head of market economics at BNP Paribas told the BBC:
“The Italian people have rejected the guy that the market liked, Mario Monti. What they have voted for is much less certain, unless it is uncertainty itself.
Markets hate uncertainty and they will take against this vote in a serious way. It is very bad for Italian growth, firms will delay investment, households will delay big purchases, foreigners will put less money into Italy, the ratings agencies will be thinking “‘do we downgrade Italy?” and the Italian borrowing costs will rise substantially.
This is going to knock 0.5% to 1% off Italian growth this year, and this is an economy that is already shrinking. At the end of the day there is no alternative to the austerity and the fiscal prudence that the European Union wants to see from its members.
The question is, how do they get the Italian people to realise that? It is clear the politicians won’t offer that up to them on a plate, as it is a recipe for being rejected. So the danger is we have to go back into a market crisis so that the Italian people will get up close and personal with the realities for the situation.”
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Contributed by Chris Carrington of The Daily Sheeple.
Chris Carrington is a writer, researcher and lecturer with a background in science, technology and environmental studies. Chris is an editor for The Daily Sheeple. Wake the flock up!