This week investors have been weighing up whether a Eurosceptic coalition suspected of plotting to take Italy out of the single currency by stealth is better than new elections which could give the same coalition an explicit mandate to do that anyway.
Spain is also facing political turmoil, with a long-running corruption scandal looking almost certain to bring down Mariano Rajoy’s conservative administration as GlobalCapital went to press.
But observers should make a distinction between the two countries, even if they could easily have been bracketed together during the years of the European debt crisis.
Spain has no serious Eurosceptic movement or party. The biggest political disruptor to the markets be Podemos, the hard-left party. But it does not have many members of parliament and has fallen to fourth in the polls, meaning the best it can hope for would be to be a junior partner in a ruling coallition.
The biggest winner from an election is likely to be the Macron-esque Ciudadanos.
Spain also has higher growth rates than Italy and its banks are healthier, with fewer non-performing assets and less oversaturation in the sector.
Meanwhile, Portugal’s left-wing government scared some investors when it came into power, but it has largely been a success, overseeing a large fall in the unemployment rate while also reducing the budget deficit.
Italy is likely to throw up plenty of challenges to the established European order over the coming months and years, and this is also a problem for Spain and Portugal. But Iberia’s good governance means it deserves market trust.