Explosive news has been coming out of the European Union on Sunday morning. It has emerged that out of all of the nations in the EU Italy is by far the most likely to leave the eurozone. This is as a result of the Italian government and the European Union, being deadlocked over new budgets plans. This battle has seen the European commission threaten disciplinary action which would take the form of a fine. The EU wants Italy to reign in its deficit which is the second largest behind only Greece.
Italy’s deficit is now at 132 percentage points of GDP. Italy had forecasted its structural deficit, to decreased by 0.6 percentage points this year which would have been in line with EU fiscal rules. However, Italy’s deficit instead grew by 0.2 percentage points. This had lead Rome bracing itself for a gigantic fine in the region of £3bn, as well as a warning from Angela Merkel warning Italy not to cross the bloc.
This has caused much debate from commentators and analysts alike. One of these people Michael Brown, who is a senior markets analyst at Caxton FX, suggests this could be as a result of Italy’s highly Eurosceptic coalition government which contains the anti-establishment Five Star Movement and Lega, whom Mr Brown has said are appearing to be “on a collision course” with the EU.
Many have also suggested that as well as this budget dispute, the Italian government has proposed to create mini-BOTs which is a parallel currency to run alongside the euro and be used by the government to meet its debt obligations.
This is a similar tactic that Greece used to bridge the gap between Greece and its creditors. In addition to this Michael Brown suggested that should the “‘currency’ could be used to facilitate the country’s departure from the euro at a later date.” Whilst the Minister of economy and finance Giovanni Tria said creating mini-BOTS would be either illegal or useless. In contrast to this, both the League and its partner in government the 5-Star Movement accused Tria of not doing enough to pay the nations arrears.
Deputy Prime Minister Matteo Salvini, who heads up the League pa, as well as trying to recruit Nigel Farage and his Brexit party into his Eurosceptic group in the European Parliament, has said “We don’t need to ask Germans, Spanish and Luxembourgish for money.
We want to use Italians’ money for Italians.” Salvini’s comments and clear Euroscepticism have led many such as Neil Wilson, chief analyst at Markets.com to say that “Italy is probably the most likely [to leave first] – you see from Salvini and co there is no love for Europe.”
Claudio Borghi, the economic head of the ruling League party, suggested last October that Italy would be far better off out of the European Union and described the Euro as a currency as “not sufficient”.
In a radio interview, Mr Borghi stated that “I’m truly convinced that Italy would solve most of its problems if it had its own currency.” These quotes were then rubbished by Prime Minister Giuseppe Conte, who said there are no plans for Italy to have their own currency. With the Italian government so clearly divided, guessing where this story goes next is anyone’s game.
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Current Affairs Correspondent | My name is Oliver Down I am 22, and a staunch brexiteer. I am a Bristolian lad who studied politics in Leicester. I believe in free speech and accurate journalism and I won’t be afraid to give you “the other side” of the story!
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