Italian Deputy Prime Minister Luigi di Maio yesterday reiterated that his country had no plans to leave the single currency, but it would not change its target for next year’s budget deficit, despite its rejection by the European Commission.
Di Maio, who is leader of the ruling coalition’s 5-Star Movement, also said in a interview with Radio 24 that the Italian government was monitoring the banking system, which is coming under stress from the increase in government bond yields.
“Markets are not concerned about Italy not respecting the EU budget rules. Investors are worried about false storytelling, according to which Italy wants to leave the euro and the European Union. That is not the case,” Di Maio said.
The deficit target of 2.4 percent of GDP, which Brussels says is too high, should not be changed, Di Maio said.
Financial markets have reacted negatively to the expansionary budget, with bond yields rising to multi-year highs as investors fret over Italy’s defiance of EU fiscal rules and the sustainability of its debt mountain, the second-highest in the eurozone after Greece.
The Italy-Germany bond yield spread retreated to 318 basis points from 323 late on Wednesday, its second-widest level since 2013, after Di Maio’s remarks and ahead of a meeting of the European Central Bank.
The spike in Italy’s debt costs might hurt the value of its banks’ large sovereign holdings and eat into their capital, Italian Minister of Economic Affairs Giovanni Tria said on Wednesday.
Di Maio said the government is monitoring the banking system and he is confident the spread would fall in the next few weeks.
“In the following weeks we’ll discuss our budget with the European Union and it will be possible to read out the details of our fiscal plan,” he said.
AI SPLURGE: The four major US tech companies have lost more than US$950 billion in value since releasing earnings and outlooks, while equipment makers were gaining Four of the biggest US technology companies together have forecast capital expenditures that would reach about US$650 billion this year — a flood of cash earmarked for new data centers and all the gear within them. The spending planned by Alphabet Inc, Amazon.com Inc, Meta Platforms Inc and Microsoft Corp, all in pursuit of dominance in the still-nascent market for artificial intelligence (AI) tools, is a boom without a parallel this century. Each of the companies’ estimates for this year is expected either near or surpass their budgets for the past three years combined. They would set a high-watermark for capital spending
China’s top chipmaker has warned that breakaway spending on artificial intelligence (AI) chips is bringing forward years of future demand, raising the risk that some data centers could sit idle. “Companies would love to build 10 years’ worth of data center capacity within one or two years,” Semiconductor Manufacturing International Corp (SMIC, 中芯) cochief executive officer Zhao Haijun (趙海軍) said yesterday on a call with analysts. “As for what exactly these data centers will do, that hasn’t been fully thought through.” Moody’s Ratings projects that AI-related infrastructure investment would exceed US$3 trillion over the next five years, as developers pour eye-watering sums
Bank of America Corp nearly doubled its forecast for the nation’s economic growth this year, adding to a slew of upgrades even after a rip-roaring last year propelled by demand for artificial intelligence (AI). The firm lifted its projection to 8 percent from 4.5 percent on “relentless global demand” for the hardware that Taiwanese companies make, according to a note dated yesterday by analysts including Xiaoqing Pi (皮曉青). Taiwan’s GDP expanded 8.63 percent last year, the fastest pace since 2010. The increase “reflects our sustained optimism over Taiwan’s technology driven expansion and is reinforced by several recent developments,” including a more stable currency,
COLLABORATION: Taiwan and the US could jointly find solutions to weaknesses in supply chain resilience for critical materials, focusing on mining and initial refinement Taiwan is likely to purchase rare earths from the US in the future, and is also in talks with Australia and Canada to strengthen global rare earth supply chain security, Minister of Economic Affairs Kung Ming-hsin (龔明鑫) said yesterday. Taiwan and the US last month concluded the sixth Economic Prosperity Partnership Dialogue, during which both sides signed a joint statement endorsing the principles of the Pax Silica Declaration, pledging to deepen cooperation in areas including critical minerals. At the time, Kung said the two sides would establish working groups to advance cooperation in areas including artificial intelligence, digital infrastructure, critical materials and
RSS