Europe's New Italian Problem
The euroskeptic “my country first” disease has reached the heart of the European Union. The birthplace of the EU is becoming the home of a new Italian government dedicated to ignoring pretty much all of the EU’s rules on fiscal consolidation. Its coalition partners—the left-populist Five Star Movement and the right-populist League—are miles apart in many regards, but come closer over immigration, their disdain for politics as usual, and a general dislike of the EU. The program the coalition announced last week combines the high-spending ambitions of the left with the low-tax ambitions of the right, implying a surge of public borrowing.
Not exactly great news for the Franco-German bulwark at the center trying to save the European Union from imploding. The Brexit catastrophe is in full swing, Hungary and Poland went over to the dark side, and now Italy seems poised to become a big headache.
Unlike Britain, Italy is a core member of the eurozone and any reform of the euro has just become a lot more complicated. “Unlike Greece, it’s too big to ignore or bully into submission,” writes Clive Crook on Bloomberg.com. “It has enormous unresolved economic and financial problems—depressed living standards, high unemployment, and a fragile banking system, in addition to crippling public debt—and if it encountered a new economic or financial crisis, the damage would be difficult to confine to Italy.”
And the new Italy presents a blow for morale in Brussels: for the first time, a founding member of the EU is led by populist, anti-EU forces. Europe’s biggest fear must now be that Italy plunges into the kind of economic meltdown that eventually came very close to catapulting Greece out of the single currency in 2015.








