Speaking to CNBC, the Investment Director at Fidelity International claimed Italy's new government coalition between Lega leader Matteo Salvini and Five Star Movement leader Luigi Di Maio will cause a huge fight with Brussels amid major European Union reform demands.
Italy's anti-establishment Five Star Movement (M5S) and its far-right partner, the League, appeared to be on the verge of signing a government deal on Thursday after overcoming outstanding divisive issues. Neither Salvini nor Di Maio want the other to get the job, but they have yet to find a mutually acceptable alternative figure.
Not so long ago, a document as radical as the draft Italian coalition programme that surfaced on Tuesday night would have sent the markets into meltdown.
The opposition Democrats have warned that the League's vow to drastically lower taxes to a flat 15-percent rate and the 5-Stars' promise of subsidies to the poor will drastically drive up government borrowing.
They have both vowed to scrap an unpopular pension reform - a move that would punch a 15-billion-euro hole in state coffers.
The debt wipe would cut 10 percent off Italy's debt/GDP ratio but the European Union will be concerned this sends a negative message to other Eurozone countries still in the middle of tough austerity measures.
Italy's benchmark stock index - the FTSE MIB Index fell 2.2%, while the 10-year Italy government bond yield soared 12 basis points to 2.075%. The spread is a "cynical board game of high finance", he said.
While Five Star's Di Maio's programme is compared to a child's picture book (above), Italian President Sergio Mattarella is pictured (below) in imagined consultations with potential coalition partners.
According to Italian media reports, their nominee for Prime Minister is likely be from a "third party" and will have to be able to make the eurosceptic nature of the new government workable with Brussels.
According to M5S sources cited by Italian media on Tuesday, M5S and the League are still divided on around five percent of their programme, including the revision of European Union treaties and the costs of politics.
"We'll need to cope together with the European challenges as we do with other EU leaders, not all of them are flawless", one of the EU officials said. Berlusconi, 81, has warned the 5-Stars are unsafe for Italy and its democracy. However the League still wants to leave the euro zone as soon as is politically feasible.
European Commission President Jean-Claude Juncker and German Foreign Minister Heiko Maas agreed on Friday to use the already available options to circumvent the required EU member states' unanimity when it comes to addressing foreign challenges including the Syrian war.
Mattarella has repeatedly stressed the importance of maintaining a strong, pro-European stance.
Each party plans to consult its supporters over the weekend to see if they back the nascent government pact.
The United States and China start trade talks on Thursday meant to avert a damaging tariff war, with the White House's harshest China critic relegated to a supporting role, senior Trump administration officials said on Wednesday.