Europe financial crisis WARNING: Italy could spark crash THIS MONTH, warn experts

Friday, August 3, 2018
By Paul Martin

ITALY is on its way to ignite the next European financial crisis as its populist government announced the nation ready to bring forward much-discussed and expensive reforms, experts warned.

By ALICE SCARSI
Express.co.uk
Fri, Aug 3, 2018

The Lega-Five Star Movement (M5S) coalition has sparked fear among European investors and market analysts after pledging to “immediately” introduce the financial changes the parties campaigned for ahead of the March 4 election.

These hefty reforms include the creation of a flat tax, which imposes the same tax percentage on all individuals regardless of income, the introduction of a national basic income and the abolition of the Fornero reform, which in 2011 established a higher retirement age for both men and women.

Analysts and the markets didn’t expect these moves to be implemented before 2019, after the Italian summer holidays – which usually put the country’s parliament on a halt until September – and the yearly approval of the financial law in autumn.

But last Sunday M5S leader Luigi Di Maio took them by surprise, saying: “Let’s make it clear, the basic income and flat tax, together with the abolition of the Fornero reform, are social emergencies.

“They must be implemented immediately.”

The abolition of the 2011 pension reform and the introduction of a flat tax will cost some £73billion (€82 bn), according to Wired Italia, an expense that could bring Italy on the brink of the crash, taking with it the rest of the eurozone.

If the govenrment decided to go ahead with these measures, Prime Minister Giuseppe Conte could find himself clashing again with German Chancellor Angela Merkel and her country, historically the financial motor of the European Union.

Marcel Fratzscher, the President of the German Institute for Economic Research (DIW), warned yesterday about the risks Rome poses to the survival of the Eurozone.

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