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Hello and welcome to our slippery coverage of the global economy, financial markets, the euro zone and businesses.
Is peace split between Rome and Brussels in the budget line that has scared the markets?
Italy reported this morning that its populist government was losing ground in the dispute over its spending plans.
Italian Prime Minister Giuseppe Conte is holding a cabinet meeting with ministers later in the day to discuss the situation. According to Corriere della Sera, the ministers are considering a new plan according to which the country's budget deficit should fall to 2.2% of GDP in 2020 and 2% in 2021.
As Bloomberg says:
The Italian government will bend to pressure from the European Union to reduce its budget deficit to 2% of gross domestic product in 2021, reversing plans to maintain a larger deficit for the next three years, the Corriere reported. della Sera, citing a cabinet meeting
Earlier, Rome had a deficit of 2.4% over the next three years, which would have violated the Brussels budget rules and triggered a terrible fight with the third largest member of the euro area.
Nicolas Forest
(@ nicolasforest)Italy 's draft budget will commit to reducing the deficit to 2% in 2021, after the government reversed its proposal to maintain a 2.4% deficit despite pressure from the government. EU, reported Corriere della Sera, citing a Cabinet meeting. #comediadelarte
This rise (announced) comes after several days of nervousness on the markets, during which Italian government bonds have weakened. On Tuesday, Italy's 10-year borrowing costs reached their highest level in four years.
We even talked about getting out of the euro and coming back to read it (although Greece found that it was easier said than done).
Gianclaudio Torlizzi
(@TCommodity)Newsflow suggests that Italy has spoken overnight to reduce the budget deficit of the coming 2020/21 to about 2%. Markets have been under pressure because of the uncertainty around that – there could be a risk. (Bloomberg)
Italy has to send its draft budget plan to the European Commission by mid-October.
Yesterday, Deputy Prime Minister Luigi Di Maio insisted that the government would not give up a "millimeter" in the conflict, because it increased its spending plans. The cabinet could be animated.
We will follow events in Italy all day ….
Also coming today
The International Monetary Fund publishes its latest assessment of the global economy and could reduce its growth forecasts.
The latest reports on the Purchasing Managers Index are expected to show that UK and euro area service sector companies experienced steady growth last month.
Michael Hewson of CMC Markets explains:
Having seen the manufacturing exceed expectations and the construction retreat, the The focus will be on the number of UK services today to complete the third quarter and on a decent economic performance for the coming quarter.. Up to now, third quarter service activity is established at 54.3 for July and 53.5 in August. The number of our days in September is expected to drop slightly to 54, which would be well above average and indicate another fairly decent expansion.
It is also the PMI day of services in Spain, Italy, France and Germany and here the numbers are slightly better than the manufacturing figures we saw on Monday. For Spain and Italy, improvements of 52.9 and 52.8 are expected respectively, while figures for France and Germany should be confirmed at 54.3 and 56.5, like the flash estimates from last week.
Elsewhere, the British supermarket chain Tesco publishes its results and the sports car manufacturer Aston Martin enters the London Stock Exchange
L & # 39; s calendar
- 9am BST: euro area PMI for September
- 9.30 BST: British PMI services for September
- 3pm: IMF publishes World Economic Outlook
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