Italy is under the first ever “Excessive Deficit” ruling in EU history. Italy is further being threatened by the European Commission, which could impose a 3 billion euro fine for being too deep in debt.
Much of Italy is getting fired up. Deputy Prime Minister of Italy, Matteo Salvini, has said he would use “all my energies to fight outdated and unfair European monetary rules.” Another prime reason for the out lash by Italy is the EU ignoring France’s violations, among which are both enormous debt and deficit.
Italy’s response is the proposal of a parallel currency (a currency that will be used alongside the Euro). Many of Italy’s politicians are supporting this proposal, along with citizens. There is a lot of resentment towards the EU and the politicians are making this clear. Claudio Borghi, Lega chairman of Italy’s house budget committee, says: “We’re not Greece. We are net contributors to the EU budget. We have a trade surplus and primary budget surplus. We don’t need anything from anybody. And we are in better shape than France.”
Further debate is ongoing in Italy of departing from the Euro completely, instead of just creating a temporary parallel currency.
This is Just the Beginning
This major conflict is spreading like wildfire in Europe, but has yet to cross the oceans and reach the mainstream media of the US, which will most certainly add fuel to the fire. The tariff wars with China caused a massive impact on the US market for a couple weeks, and that conflict has only recently cooled down.
An immensely large country such as Italy leaving the euro would have devastating effects on the world economy. The German Bundesbank, which is the foundation of the EU, has stated that it would suffer massive losses if Italy left the euro.
Italy’s government has already passed the creation of “minibots”, a form of parallel payments. This may be a step towards getting rid of the Euro.
Italy owes Germany ~€450 billion, and a few billion more to other countries. This means that, if Italy were to drop its debt, other European countries would have just lost half a trillion Euros.
This is the beginning of some major developments. Italy has the support of most of its people and politicians and it seems fairly likely that they will move away from the euro. The effects of this are impossible to calculate.
The impact of this is yet to be seen overseas. Things are certain to become more complicated and conflict will rise as the US joins this event.