European Economics

Will turmoil in Italy spark contagion?

European Economics Update
Written by Capital Economics Economist

The fallout from the latest political turmoil in Italy has so far been contained, with limited impact on other euro-zone countries’ financial markets. There are good reasons to expect this to remain the case in the near term. But the size of Italy’s debt stock means that if fears of an Italian euro exit continue to build, the risks of contagion would jump.