Tumultuous 24 hours for eurozone politics

SPANISH Socialist Party leader Pedro Sánchez was sworn in at the weekend as the nation's prime minister after a tumultuous 24 hours not just in Spain, but also Italy, the eurozone's fourth and third largest economies. For Friday, remarkably, saw not just the right-of-centre Spanish People's Party (PP) turfed out of office after almost seven years, but also the formation of the new Italian populist government of Five Star and The League after tortuous negotiations.

Yet, far from ending political uncertainty in the two nations, Friday's political power plays - which come after a period of eurozone jitters - may well lead to a continued period of instability. Indeed, fresh elections in both countries in 2019, if not before, cannot be ruled out.

The political problems in Italy stem not just from the free-spending, populist political stripe of the coalition, but also from the new administration that may well be incapable of securing the structural reforms that the country badly needs. Already, the nation is, potentially, the biggest single threat to the eurozone's future with the second biggest debt load in the single currency area at over 130 per cent of GDP, and its banking sector is under significant stress with massive under-performing loans.