(see related story on budget) Italy is in danger of going into recession next year and the financial markets could end up forcing the government to change its economic policy, according to a new report by Goldman Sachs. The report on global growth entitled Landing the Plane said Italy was one of the risk factors that could complicate the outlook for the European market in 2019.
It said that, with a dispute with the European Commission over the government's budget plans "unresolved", the Italian economy was expected to "flirt with recession at the start of next year".
It forecast that Italy's GDP growth next year would be 0.4%, compared to a consensus among analysts of 1%.
The report said "Italy is casting a dark cloud" over the European market outlook, adding that "things could get worse before an improvement is seen". Goldman Sachs said it was skeptical about the ability of Brussels or Rome to "change direction" in the budget negotiations.
Its analysts said that it was "more likely that the pressure of the markets catalyzes a return to budget discipline".
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