If the eurozone implodes, Britain will go with it
Unless Germany acts soon,
this country could find itself going the way of Italy.
By Jeremy Warner
Britain’s economy may already have dipped back into recession, but thanks to developments in Italy over the past few days, the chances of it being pushed into something very much worse have got a whole lot bigger. As was always predictable, getting rid of Silvio Berlusconi hasn’t helped matters one jot – yields on 10-year Italian bonds soared past 7 per cent yesterday.
This was the level that forced Greece, Ireland and Portugal to seek support from European and IMF bail-out funds, and there is no reason to believe Italy is any more capable of weathering the storm. Economic contraction, reinforced by repeated rounds of austerity, has put Italian sovereign debt on an unsustainable path. It’s taken less than a week for the Cannes summit to prove itself wholly irrelevant, and the crisis is again spiralling out of control. Italy, the eurozone’s third largest economy, is not just “too big to fail”, but it may also be too big to bail.