This Is What Italy's "Worst Case" Scenario Looks Like, According To Morgan Stanley

Now that the initial shock from the formation of an anti-establishment, populist government in the Eurozone's 3rd largest economy, has passed banks are starting to focus on the concrete policy proposals that will soon be attempted and implemented by the 5-Star/League coalition. And, as is widely known especially by Brussels bureaucrats, the proposed fiscal plan will put Italy's public finances under pressure, as it's based on large spending increases and uncertain revenues, in some ways similar to Trump's own fiscal stimulus.

This, according to Morgan Stanley, likely means (much) higher borrowing costs and downward pressure on the sovereign rating.