Italy, often dismissed as Europe’s weak link in the past, has become a success story. This is shown clearly in the verdict of investors.
Its stock market has outpaced continental peers in the past five years, with the benchmark FTSE MIB climbing about 120 per cent against a 60 per cent rise for the wider European market’s FTSE Eurofirst 300 index. Bond markets tell a similar story.
In 2022, the spread on 10-year government bonds between Italy and its neighbour France was 1.8 percentage points. In 2018, it was even higher at 2.9 percentage points. But recently, the 10-year Italian yields have fallen below French ones. This is not just about a shift in views over the improving fiscal position of Italy — it is a political one. Stability and discipline have unlocked the country’s deep industrial strengths. Unless Europe draws the lesson, it will squander a generational opportunity and drift further behind the US and China.
The financial strength of Italy’s situation is improving. Public debt to GDP is expected by the IMF to stabilise at current levels at about 127 per cent for the next five years. The banking system, once a liability, has rebuilt its capital buffers and cleaned up bad loans. And, unusually for Europe today, politics in Rome has been stable enough to reassure markets. In short, predictable governance — something Italians rarely used to associate with themselves — has begun to matter.
The 2026 budget presented by Prime Minister Giorgia Meloni last month seeks to bring the deficit-to-GDP ratio to below 3 per cent, creating space for a potential credit rating upgrade. That debt level would also allow Rome to exit the EU’s excessive deficit procedures.
Expectations are also high for Italy’s planned financial markets law, now moving through the approval process. Drafted by a pool of independent experts — of which I was a member — the reform aims to simplify and clarify the framework for investing in Italy. By merging two laws with dense and technical text into a single, more accessible piece of legislation, it seeks to channel private savings towards productive investments and to foster sustainable economic growth.
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Italy, often dismissed as Europe’s weak link in the past, has become a success story. This is shown clearly in the verdict of investors.
Its stock market has outpaced continental peers in the past five years, with the benchmark FTSE MIB climbing about 120 per cent against a 60 per cent rise for the wider European market’s FTSE Eurofirst 300 index. Bond markets tell a similar story.
In 2022, the spread on 10-year government bonds between Italy and its neighbour France was 1.8 percentage points. In 2018, it was even higher at 2.9 percentage points. But recently, the 10-year Italian yields have fallen below French ones. This is not just about a shift in views over the improving fiscal position of Italy — it is a political one. Stability and discipline have unlocked the country’s deep industrial strengths. Unless Europe draws the lesson, it will squander a generational opportunity and drift further behind the US and China.
The financial strength of Italy’s situation is improving. Public debt to GDP is expected by the IMF to stabilise at current levels at about 127 per cent for the next five years. The banking system, once a liability, has rebuilt its capital buffers and cleaned up bad loans. And, unusually for Europe today, politics in Rome has been stable enough to reassure markets. In short, predictable governance — something Italians rarely used to associate with themselves — has begun to matter.
The 2026 budget presented by Prime Minister Giorgia Meloni last month seeks to bring the deficit-to-GDP ratio to below 3 per cent, creating space for a potential credit rating upgrade. That debt level would also allow Rome to exit the EU’s excessive deficit procedures.
Expectations are also high for Italy’s planned financial markets law, now moving through the approval process. Drafted by a pool of independent experts — of which I was a member — the reform aims to simplify and clarify the framework for investing in Italy. By merging two laws with dense and technical text into a single, more accessible piece of legislation, it seeks to channel private savings towards productive investments and to foster sustainable economic growth.