EU THREAT: Italian failure could spell the end of the Eurozone, warns German expert

Monday, June 4, 2018
By Paul Martin

A FAILURE in Italian politics could bring the entire Eurozone crashing down as Rome’s new populist government pledges to make serious changes to the European Union’s single currency bloc, warns a German finance expert.

By JOE BARNES, BRUSSELS CORRESPONDENT
Express.co.uk
Mon, Jun 4, 2018

Five Star Movement and Lega have finally been sworn in as the new Italian government after the country was left in political limbo since the March general election where no clear winner was found.

Both parties have championed policies which promise to address Italy’s significant debt and a perceived Eurozone imbalance the country suffers from. However, this stops short of actually leaving the single currency bloc altogether – a leaked policy which has since been ditched.

Marcel Fratzscher, CEO of the German Institute for Economic Research, has warned a failure in national politics in Europe could bring the entire Eurozone to its knees, with a potential crisis in Italy being far worse than the one in Greece.

He fears Italy is “too big to be saved” with the European Central Bank facing a much bigger challenge than Greece if Rome is to face the same fate.

The French and German governments will most likely have to intervene to avoid any crisis, Mr Fratzscher added.

He said: “I hope that with Italy we will not experience a scenario as with Greece. I hope that the future Italian government, but also the French and German, have learned from the mistakes of the past.

“I hope, but I’m afraid, that euroscepticsm is now anchored in big parts of Europe and the economic output in the euro area. And then the price is immeasurably high: the ECB and euro were able to overcome the crisis in Greece. Italy is just too big to be saved. That is 20 percent of the economic output in the euro area

“That worries me a lot because then the crisis will not be limited to Italy. This will create a centrifugal forces that are unmanageable. If Italy falls, it could mean the end of the euro.”

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