The rise of strong euroskeptic parties in Italy in recent years had raised serious concerns about whether the country will permanently remain in the euro area.
Although anti-euro rhetoric is now more muted, the fear of an “Italexit” still lingers in the economy. Italy’s notoriously high public debt is generally considered sustainable and not at risk of defaulting; however, investors see political unknowns still weighing on the financial stability of the country.
Mirroring uncertainty, the Italian long-term government bonds carry interest rates that, though historically low, are four times higher than their Spanish or Portuguese equivalent.
Currently, euroskeptic parties are clearly leading Italy’s polls.
Source: Why Italy cannot exit the euro