Welcome to the Eurointelligence podcast. I'm Wolfgang Munchau and with me are Zanemunshank and Jack Smith.

Today we want to talk about the Eurocrisis. Not the Euro crisis of 2010, 2012, but potentially the Euro crisis of 2023.

For the first time, in a very long time, we're observing a serious increase in spreads and serious increase in bond yields.

And it looks like investor sentiment is turning.

Now, to preface this conversation, we don't have a euro crisis yet.

We may not even get one.

We're not predicting this.

But things are changing.

The sentiment of investors is turning.

This extreme optimism about inflation,

about fiscal policy. All this seems to have evaporated. Jack, you wrote about the story this morning.

So what happened? So I think it's been a couple of different things. I mean, one of them is that,

as you've said, investor sentiment is turned and there's increasingly an expectation that that is going to

kind of be more of a continuing problem. I think one of the things that has done this

approximately is the recent rise in oil prices. That's played a role in kind of changing the

sentiments. And then news, I guess, on European budgets that shows that

some countries are going to be sustaining some higher budget deficits into the future. So I think

Italy has said that it's penciled in a budget deficit of 4.3% of GDP for next year, or that's the

kind of target at the moment. And then in France, it was, I think, 4.4%. Well, in Italy's case,

this is quite a bit off of what they said that they were going to be doing at the earlier on this

year. In France's case, not so much. But also, both of those are kind of quite a bit higher

than the 3% target that's currently in the EU's fiscal rule framework.

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