In this series on the globe’s fiscal crisis, we’ve looked at France, the United Kingdom, and Japan.

Today, let’s look at Italy.

We’ll start, as usual, by looking at the nation’s fiscal performance this century.

I’d like to write a good news-bad news analysis about the chart, but there is nothing positive.

The somewhat-bad news is that government is growing is growing faster than population plus inflation. Not by a huge margin, but enough for continuous deterioration.

The bigger-bad news is that Italy can’t afford that deterioration.

Which explains why Italy is on the wrong side of this critical line. It’s not going in the wrong direction as rapidly as nations such as France and the United Kingdom, but

Back in 2019, I wrote a two-part series (here and here) explaining why Italy will be the first domino to fall when the fiscal crisis begins.

I’m no longer confident in that prediction. But not because Italy has gotten better. Instead, other countries have moved in the wrong direction even faster.

Like France, Italy has a major problem with spending for old-age benefits.

The only good news (relatively speaking) is that things won’t get worse. As explained in my Fraser Institute study, Italy’s version of Social Security is enormously expensive, but is not projected to grow in the future.

But that doesn’t change the fact that the overall fiscal outlook for Italy is not positive.

We’ll close with this depressing comparison of interest rates on government debt in major nations. Italy is one of the unfortunate countries where the light-blue line (interest rates on national debt) are rising faster than the black line (the average interest rate for debt in all nations).

In other words, investors are nervous about the viability of Italian debt.

If they don’t trust that a government will honor its debts, they demand higher interest rates to compensate for risk.

I half-joked back in 2015 about the possibility of Sardinia seceding from Italy and becoming a Swiss canton. Looking at the above charts, maybe the more practical step is to have the entire country of Italy copy Switzerland’s very successful spending cap.