EU facing NIGHTMARE as Italy coalition to demand £219bn debt WIPED as it RIPS UP rulebook

Wednesday, May 16, 2018
By Paul Martin

ITALY’S prospective coalition will try to get £219billion WIPED off its debt as it re-writes the eurozone rulebook.

Wed, May 16, 2018

A leaked draft of the coalition agreement between populist parties 5-Star Movement and the League revealed the Eurozone’s third-largest economy is planning to hit the European Union with a nightmare scenario which could divide members.

Should the parties get into power they will demand a renegotiation of Italy’s European Union budget contributions, the dismantling of a 2011 pension reform that raised the retirement age, and an end to sanctions against Russia.

The joint document will demand the ECB forgives Italy of €250 billion Italian benchmark BTP bonds bought under the bank’s so-called “quantitative easing” programme to help reduce Italy’s public debt. Italy’s debt mountain totals more than 130 percent of national output is the highest in the Eurozone after Greece’s.

The debt wipe would cut 10 percent off Italy’s debt/GDP ratio but the EU will be concerned this sends a negative message to other Eurozone countries still in the middle of tough austerity measures.

It could lead to a spate of Eurosceptic, populist parties making promises to clear EU debt.

German taxpayers will again be resentful that they are, in part, picking up the tab for another country’s economic mismanagement.

The leaked text also suggested the coalition was clearing the path for Italy to leave the eurozone, demanding the creation of “economic and judicial procedures that allow member states to leave monetary union”.

But the coalition quickly retreated, claiming the text, dated May 14, was “an old version that has been considerably modified”.

A new statement confirmed the new potential coalition had decided “not to call into question the single currency”.

The League and Five-Star have held six days of talks aimed at putting together a coalition government to end 10 weeks of political stalemate following an inconclusive election on March 4.

Both parties are keen to make good on their election promises and before the polls, M5S and the League both blamed the EU’s overbearing rules for Italy’s chronically weak growth, rising poverty, and voter resentment.

M5S leader Luigi Di Maio said yesterday he hoped a deal could be reached today that would subsequently be put to supporters of both parties to see if they backed the pact.

The Rest…HERE

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