Rolling coverage of the latest economic and financial news, as Donald Trump floats payroll tax cuts to protect US economy from coronavirus * Latest: European rally is fizzling out * RBS offers mortgage and loan holidays * Italy ‘to suspend mortgage payments’, report * Trump: We’ll pass payroll tax cuts soon * Crash Monday: Trillions wiped off markets 5.30pm GMT Our economics editor Larry Elliott agrees that Italy faces a recession this year -- and probably a rather deep one: With schools, universities, theatres and cinemas shut and its hugely-important tourist industry facing a washout summer, the economy is going to shrink in both the first and second quarters of 2020. For the rest of Europe Italy is a country that is too big to fail. So what’s really at stake is not whether Italian GDP contracts by 1.5% or 4.5% in the second quarter but whether its financial crisis proves contagious. As it might. Charles Dumas, of TS Lombard, says: “The [Italian] banking system is unlikely to be able to remain solvent or liquid in the current conditions of nationwide lockdown. The tourist industry is effectively dead for 2020. Fiscal stimulus could be counter-productive if, as is possible, investors demand a much wider credit spread to accept fresh Italian paper. Italy will need massive support from eurozone partners to avoid going the way of Greece. Related: An Italian financial crisis is certain – the big question is how contagious it is | Larry Elliott 5.28pm GMT In another blow to Italy, the number of Covid-19 deaths and infections has risen sharply again: #italy #coronavirus update: 168 more deaths in the last 24 hours, taking the total to 631. 981 more cases - up to 10,149 #COVID19 Coronavirus cases in Italy rise over 10,000 with 631 deaths - BBG Continue reading...
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