KBRA Europe Releases Research – EU Recovery Funds May Incentivise Italy Policymakers

DUBLIN--(BUSINESS WIRE)--KBRA Europe (KBRA) releases research on the incentives for a new government in Italy to pursue pragmatic policymaking with regards to the absorption of EU funds.

Italian Prime Minister Mario Draghi’s recent resignation and dissolution of Italy’s parliament have sparked concerns about the country’s economy at an already difficult moment. High inflation and energy shortages have put increasing pressure on the macroeconomic environment. The current bout of political instability has the potential to worsen the situation, possibly encumbering the deliverance of the European Union (EU) recovery funds. Recent polls in Italy demonstrate extremely high popular support for these funds due to the vital role they play in boosting the economy. KBRA on 29 July revised its long-term rating Outlook for Italy (BBB/K2) to Stable from Positive as a result of the country’s political crisis and deteriorating macro environment (see the surveillance report for more information); however, we believe that pragmatism towards EU funds, which is still to be determined, would support the sovereign’s credit quality.

Click here to view the report.

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KBRA is a full-service credit rating agency registered in the U.S., the EU and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.