ROME—The global policy trend of heavy fiscal stimulus, led by the U.S., faces a test case in Southern Europe.
Italy, Greece and Spain, hit hard in Europe’s sovereign-debt crisis a decade ago, are once again running big budget deficits and planning to spend on a grand scale to revamp their economies.
Italian Prime Minister Mario Draghi and other leaders in the region are betting that ambitious investments can give a lasting boost to growth. If the gamble doesn’t work, these countries will be saddled with some of the world’s highest debt ratios, potentially destabilizing the eurozone.
After years of running tight budgets with little room for transformative investments, they now see a once-in-a-generation chance to revitalize their economies.
Mr. Draghi, presenting his plans to Italy’s Parliament, said they contain not just a list of public works but “the destiny of the country.”