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The analysts at Goldman Sachs fear that Italy’s fiscal profligacy may not go down well with the ratings agencies, forcing them to downgrade the credit rating of the Eurozone’s third largest economy.

Key points

We now expect the 2019 government deficit-to-GDP to be just short of the 3% Maastricht level and that public debt will be on a rising trajectory again.

Such an expansionary fiscal policy stance will put the Italian economy and Italian assets under pressure, in our view. It increases the risk of a series of credit rating downgrades and could lead to difficult discussions with the European Commission.