Major financial-market indices in Italy plunged Friday morning after the country’s cantankerous populist coalition succeeded in pushing through a big-spending budget that includes a €780 (about $900) per month universal basic income for Italian citizens. The debt-ridden country will pay for the pledges by increasing its debt further; the new budget projects a deficit of 2.4 percent of GDP, far higher than the European Union’s 2 percent requirement. There are fears that the chaos surrounding the budget could lead to the downfall of the government.
Potentially good policy in the hands of a bad administration in suboptimal circumstances is the death of potentially good policy.
This likely has some significant EU ramifications, as well.