Italian Prime Minister Giuseppe Conte meets the press at Palazzo Chigi before summer break, on August 08, 2018 in Rome, Italy. Photo: Simona Granati - Corbis/Corbis via Getty Images
Italy faces a potential downgrade in its sovereign credit rating from three agencies — Moody's, Fitch and S&P — as its newly-elected coalition government attempts to incorporate expensive campaign promises into its budget for next year, according to FXStreet.
The big picture: The spending promises made by the anti-establishment Five Star Movement and the far-right League, whose coalition government must approve a budget by mid-October, include cutting taxes while also boosting pensions and welfare — policies that could cost between $74 billion and $142 billion. Public debt already sits at 130% of GDP, second-largest in the euro zone, and an Italian banking crisis could spell serious trouble for the rest of Europe.