The right-wing Northern League wants to pull Italy out of the eurozone, and the anti-establishment 5-Star Movement, which some opinion polls say is now the country’s most popular party, wants to hold a referendum on the issue.
Italy’s Five Star keeps options open on euro referendum
The anti-establishment Five Star Movement, Italy’s most popular political party, said yesterday (23 March) a referendum on the euro was not its top priority and that it hoped Europe would reform before a ballot could be arranged.
“It is an illusion to think that Italy’s economic problems could be solved more readily outside Economic and Monetary Union,” Bank of Italy Governor Ignazio Visco said in an annual speech to shareholders in Rome.
Italy’s wealthy north to demand more power from Rome in referendums
Italy’s wealthy northern regions of Lombardy and Veneto, controlled by the right-wing Northern League, will hold referendums in October to try to obtain greater autonomy from the central government, Lombardy’s president said yesterday (20 April).
The parties that favour giving up the euro blame Italy’s chronically slow growth in part on the constraints of eurozone fiscal rules. Elections are due by May 2018, but officials from the main parties say they expect a vote this autumn.
Renzi suggests next election be synchronised with Germany’s
Former prime minister Matteo Renzi suggested yesterday (28 May) that Italy’s next election be held at the same time as Germany’s, saying this made sense “from a European perspective”.
“A departure from the euro, which is often discussed with scant knowledge of the facts, would not serve to heal the structural defects of our economy; it certainly would not lower interest expenses and much less would it magically lower our debt level,” Visco said.
“On the contrary, it would generate serious risks of instability.”
Visco’s six-year, renewable mandate comes to an end in October. The 5-Star Movement, which blames him for failing to prevent a series of bank crises, has said he should not be given another term in office.
Visco said Italy must focus its energies on bringing down its huge public debt, the highest in the euro zone after Greece’s at around 132% of gross domestic product.
Debt is “a serious source of vulnerability which weighs on the country’s economy,” Visco said. “An appreciable and lasting decline in the debt-to-GDP ratio must commence without delay.”
“There must be no repeat of past errors: the failure to reduce the ratio of debt to GDP sufficiently in good economic times forced us to make pro-cyclical adjustments during the crisis,” Visco said.
Italy is historically the eurozone’s slowest-growing economy. Its GDP is still more than 7% below its level at the start of the global financial crisis in early 2008; GDP in the rest of the currency bloc is now 5% higher.
Italy greenlights plan to cut deficit by €3.4 bn
Italy’s debt-burdened government approved a package of economic reforms Tuesday (11 April) designed to cut €3.4 billion from its deficit this year, Prime Minister Paolo Gentiloni said, following pressure from Brussels.
Visco warned that at currently projected rates of growth, Italy’s economy would only return to its 2007 level sometime in the first half of the 2020s.
He called for a major overhaul of Italy’s economic policies, with an increase in public investment, a “re-thinking” of tax rates on companies and individuals and a “re-doubling” of efforts to combat tax evasion.
He said Italy’s economy would probably grow around 1% this year, broadly in line with the 0.9% growth in 2016 and around half the rate expected for the eurozone as a whole.