EU ON BRINK: ‘We could handle Brexit but Italy will be TOO MUCH’ – finance minister

Alice Scarsi — Daily Express May 31, 2018

Dana Reizniece-Ozla, Latvian finance minister. Click to enlarge

Dana Reizniece-Ozla, Latvian finance minister. Click to enlarge

Italian politics may be the final nail in the coffin of the EU if the country’s politicians cannot find a solution to its crisis soon, said Dana Reizniece-Ozola.

The minister said that the recent disruption on the market activity created by the political chaos in Italy could “definitely” impact the growth of the bloc.

He added: “I think we can see what an impact Brexit has already caused to the EU in general and, if Italy fails to form a government, that might be still pro-European and still dedicated to the reforms and getting the country back within the fiscal stance, that might be a bigger harm to the whole of Europe.

“We could handle Greece, we could and will handle Brexit but Italy will be too much I think.”

The financial markets have become increasingly worried since the election that took place three months ago ended in a hung parliament but saw the majority of Italian voters backing eurosceptic parties Lega and Five Star Movement (M5S).

The two parties later agreed on forming a government coalition together to unlock the political stalemate, drawing in their “contract” starkly eurosceptic policies.

The crisis deepened last week when pro-EU President Sergio Mattarella vetoed the appointment of anti-euro economist Paolo Savona as finance minister.

The head of state’s opposition sparked outrage among Lega and M5S leaders and led Giuseppe Conte, who had been previously appointed prime minister, to resign, possibly prompting fresh elections that could take place as soon as in July.

The political instability reflected on the Italian market, which plummeted sending the euro to its six month low against the dollar.

And investors didn’t hide their fear a return to the ballot may result in an even stronger victory for populist and anti-euro agendas.

Leading macroeconomist Lorenzo Codogno drew different post-electoral possible scenarios, giving a 60 percent chance of victory to an electoral alliance between Lega and M5S which would turn the election into an in or out EU referendum.

But the formation of a government may not mean the end of EU’s worries, as in the government programme drawn up by the two populist parties during the last weeks there are financial reforms and new immigration policies that could lead Italy to an open war with the bloc.

And both forces in the past spoke in favour of challenging the European Union’s budget rules, changing its immigration policy and even ditching the euro to go back to the old Italian currency Lira.

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