Thread by @FerdiGiugliano

After a few weeks of negotiations Italy's new government team of the 5 Star Movement+Democrats is out. A few impressions:

Thread 👇 1/6

The 5 Star Movement outmaneuvered the Democrats in the negotiations. They keep the prime minister and the crucial job of undersecretary in the PM office (which the Democrats had wanted). 5 Star also take foreign affairs, industry, education and justice. 2/6

The Democrats can claim the finance ministry with the influential MEP Roberto Gualtieri. This is a double-edged sword, however. The finance minister has to enforce budget discipline via tax hikes and spending cuts. Gualtieri risks becoming unpopular. 3/6

Luigi Di Maio, 5 Star leader, becomes minister for foreign affairs. In February, Di Maio prompted France to recall its embassador to Italy after a visit to the "yellow vest" movement. The Democrats repeatedly accused Di Maio of being incompetent. They now give him a top job. 4/6

4) The controversial home affairs ministry goes to a technocrat, Luciana Lamorgese. The Democrats could not impose one of their own and will have to mediate to dismantle the immigration reforms introduced by Matteo Salvini. 5/6

Overall, a pretty disappointing government team. The new finance minister will negotiate some budget flexibility with Brussels but maintain a prudent budget. Investors see this as a positive. But do not expect significant reforms that will change Italy's long-term trajectory. 6/6

BONUS TRACK: Italy's new government is already looking shaky. My column from this morning for @bopinion. bloomberg.com/opinion/articl…