ITALY leaving the European Union and the Eurozone would be a “disaster” for the bloc from both a political and economic perspective, as it could lead to a turmoil in the financial markets and the departure of more countries, experts have claimed.
By Alice Scarsi
PUBLISHED: 11:05, Fri, Mar 9, 2018 | UPDATED: 13:08, Fri, Mar 9, 2018
The shocking outcome of the election that took place in Italy last Sunday has paved the way for populist parties Lega and Five Star Movement, which together gathered more than 50 per cent of the votes.
Both the forces are eurosceptic and have in the past promoted the idea of pushing Italy outside of the EU and the eurozone.
Experts claim the possibility of a so-called Italexit would be devastating for the EU, which would see a second country leaving its borders in less than two years.
Lorenzo Codogno, former general director at the Treasury Department of the Italian Ministry of Economy and Finance, thinks Italy exiting the European Union would lead to a “storm in the markets”.
He said: “Italy is a big country, the third-largest national economy in the eurozone and one of the six founding members of the bloc.
“If it left the Union, there would be a storm in the markets, Italy would suffer but Europe would also be hugely affected.
“Italexit would be something very difficult to manage for the EU, so the bloc would do anything to make the country remain.”
Market analyst and CEO at Explain The Market Guy Shone thinks that Italexit would highlight the divisions within the EU, although he sees an exit of Italy too dangerous for a country with such a fragile banking system.
He said: “If Italexit were to happen, I think it would be reasonable to imply that the EU in its current form would be under threat and would be failing to prove its essentiality.”
Leaving the eurozone would be even more difficult than the process undertaken by the UK of leaving the European Union.
Whereas Britain has kept the pound, Italy uses the euro, which would make an Italexit a business complicated enough to threaten the survival of the single currency.
Mr Codogno said: “Leaving the eurozone poses a much greater problem than walking out of the bloc.
“While it was an established procedure to leave the EU, there isn’t anything like Article 50 that allow countries to opt out.”
The financial difficulties that would arise from Italexit for Italy itself lead Mr Codogno to think that the process is still far from becoming a reality.
He said: “These newly-elected eurosceptic parties might soften their positions once in power and change their attitude as concrete financial problems, such as a financial crisis and the need of a new currency, would pile up with an Italexit.
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“Nevertheless, the populists’ stance may cause severe problems, and if the will of the people is strongly in favour of an exit, they could have to act accordingly.”
In 2014, Five Star Movement founder Beppe Grillo proposed a referendum that would have questioned Italians on the possibility of leaving the eurozone.
Two years later, the party decided to set aside the referendum for the moment and to work at changing the Union from within.
In September 2017, Five Star political leader Luigi Di Maio said: “We have presented a seven-point programme to the European Parliament on the euro, with a referendum on the single currency as the final point.
“If the attitude is one of openness, we are willing to take part in a discussion on changing the rules of the game.”
The Standard Eurobarometer, which analyses the mood of European citizens towards the Union, in November signalled that that only 58 per cent of Italians were in favour of the euro, the lowest percentage recorded among all the members of the EU.
The once europhile nation has changed its attitude towards Europe following the financial crisis which hit the country in 2008 and fears over illegal migration.
The possibility of an alliance between the two eurosceptic parties seems momentarily impossible, as Five Star opened to a coalition with the europhile and centre-left wing Democratic Party while Lega leader Matteo Salvini has declared he is willing to enter Palazzo Chigi only with his centre-right wing allies Forza Italia and Brothers of Italy.
Still, Lega has already stepped up his pressure against the EU.
On Wednesday, a senator from the anti-establishment party said: “The EU is becoming more and more of a German empire.
“We are seeing German bureaucrats taking over the key positions in the EU institutions.
“We can understand why Britain wanted to escape from this prison.”