ITALY’S prime minister, Matteo Renzi, suffers from a condition so rare it has yet to feature in any medical journal: proclamitis, the compulsive announcement of new policies.On October 19th he declared on a chat show that he was giving mothers a tax break of €80 ($ 101) a month in the first three years of their children’s lives. Coming soon after the unveiling of an already expansionary 2015 budget, his pledge alarmed commentators almost as much as it delighted Italy’s prospective mamme.For the leader of a country with debts expected to hit 137.5% of GDP this year, Mr Renzi is playing a high-stakes game. He is betting he can reduce that figure by expanding the economy with tax cuts and increased spending. Crucial to his strategy is investor confidence in Italian bonds: if they lost faith in him and demanded significantly higher returns, Italy could be pitched into a maelstrom of higher borrowing costs and rapidly mounting debts. That was what happened to Silvio Berlusconi in 2011.
Already, markets are jittery. On October 16th the spread between Italian and German benchmark yields, a measure of investor confidence, passed 172…
