In the early hours of today, a man drove a car into a crowd of pedestrians in the Italian city of Trento, injuring eight. The driver, a 34-year-old Italian national with a history of mental instability, was arrested at the scene. Italian authorities have confirmed they are studying British counter-terrorism methods in response, a detail that speaks volumes about the globalisation of security threats and the fiscal burden they impose.
Let’s be clear. This is not a terror attack in the classic sense—no ideological affiliation has been claimed. But the modus operandi echoes the Nice truck attack of 2016 and the Westminster Bridge assault of 2017. The weapon is a vehicle, cheap and ubiquitous. The target is public space, which is inherently unprotected. The cost is measured in human lives and, inevitably, in government expenditure.
Italy’s interior ministry has already announced a review of security protocols at pedestrian zones and public events. They will look to Britain’s counter-terrorism strategy: the use of hostile vehicle mitigation barriers, the “Run, Hide, Tell” campaign, and the controversial Prevent programme. All of this comes at a price. The UK has spent over £2 billion on counter-terrorism since 2017, according to the Home Office. That money is sourced from the taxpayer, whether through direct taxation or increased borrowing. And borrowing pushes up gilt yields, which in turn raises the cost of servicing the national debt. It’s a cycle the market watches closely.
Investors should note the reaction of European bond markets today. Italian BTP yields ticked up 3 basis points on the news, a modest move but one that reflects the market’s sensitivity to security-related spending. The Bank of Italy’s latest fiscal outlook already shows a budget deficit of 5.3% of GDP, and any new security spending will only widen that gap. The European Central Bank may be forced to step in with further monetary accommodation, but that risks stoking inflation in the medium term. We have seen this pattern before: security scares lead to fiscal expansion, which leads to inflation fears, which lead to capital flight. The pound sterling has already weakened against the dollar this week, though the UK is not directly implicated in today’s attack.
What of the victims? Eight injured, none critically. They will recover physically, but the psychological scars linger. The city of Trento has declared a day of mourning, and flags fly at half-mast. Yet the market does not mourn. It calculates. The cost of policing additional pedestrian zones, the insurance premiums for local businesses, the opportunity cost of heightened security at public events. These are the metrics that matter in the boardroom and the treasury.
The British connection is instructive. The UK has endured waves of vehicle attacks since 2017, and its counter-terrorism apparatus is now a model for allies. But model or not, it is expensive. The Home Office’s Counter-Terrorism Strategy for 2023–2026 includes £1 billion earmarked for protective security and aviation security. That is money that could have gone to tax cuts or infrastructure. The trade-off is stark: security versus economic growth. In the long run, chronic public spending on security can crowd out private investment, slowing productivity and depressing wages.
For now, the markets will watch the ECB and the Bank of England for any shift in policy. The Bank of England’s Monetary Policy Committee is already grappling with sticky inflation in services, and any additional fiscal stimulus from security spending would make their job harder. They may have to keep interest rates higher for longer, which would further squeeze households and businesses. It is a brutal arithmetic.
In Trento, the investigation continues. The driver’s motives are unclear, but the consequences are not. Another attack, another rise in bond yields, another call for more spending. The bottom line is this: the market price of security is rising, and we are all paying it.
