Bill Carmichael: Never mind Greece, the Italians are heading for disaster

LIKE thousands of other Britons I have been enjoying a holiday in Italy, and it is not difficult to see the attraction – marvellous climate, lovely people, fantastic food and wine and art and architecture without parallel.

But for many Italians things are not quite so sunny because the country’s economy is in an almighty mess.

So much attention has been focused on the problems of Greece recently that Italy has flown under the radar, but the crisis there is very real, as even a brief look at the numbers will show.

And of course Italy has a much bigger economy than Greece. The Euro can perhaps survive Greece’s eventual withdrawal from the currency, but if Italy – Europe’s fourth largest economy – crashed out then it would be curtains.

Italy’s problems can be summed up in four words – high debts, low growth. Italy has been running an annual deficit for many years and the resulting debt pile at around 130 per cent of GDP is second only to Greece’s in the EU. For comparison the UK’s debt is a still terrifying 90 per cent of GDP.

Many economists argue that running an annual deficit – spending more than you earn as a country – isn’t a serious problem as long as the borrowed money is used on infrastructure and other projects that will create jobs, widen the tax base and promote growth.

But that emphatically is not happening in Italy. Growth can only be described as sluggish. In the 16 years since Italy joined the Euro the economy has grown by around 4.6 per cent – an annual average growth rate of less than 0.3 per cent.

The fault is not entirely the Euro’s. Although the single currency certainly has not promoted prosperity as its supporters confidently predicted, there are also structural problems that urgently need reform.

For example, it is difficult to start a business in Italy and even harder to expand one. It is also difficult to sack anyone. This, of course, is because of regulations designed to protect workers, but it has had the opposite effect. Employers are reluctant to take on new workers because they can’t lay them off if times get tough.

As a result, unemployment in Italy is shockingly high. Figures released last week showed youth unemployment at an all-time record 44.2 per cent. As well as the obvious misery this represents, if you allow the EU to destroy the life chances of almost half of your young people it must have implications for the future stability and prosperity of the country.

It is difficult to see a solution to these problems. In times past, when the Italian government actually ran the country, the answer was simple – devalue the lira and the resulting export-led growth spurt would create employment and help shrink the debt.

But the Italians no longer run Italy – it is merely a colonial outpost of the new EU empire and they must obey the diktats from their political masters in Brussels and Berlin. That means no escape from the euro straightjacket and a tough austerity package that is bleeding the country white.

When a democratically-elected Italian government objected to this back in 2011 it was quickly overthrown in a bloodless coup d’etat orchestrated by the unelected, unaccountable bureaucrats of the European Commission.

Of course the Italians are watching the Greek tragedy carefully. There the cack-handed left-wing Syriza government disastrously tried to face down the Eurocrats and ended up meekly accepting an austerity package far more severe than the one they had previously rejected.

The message of this episode is clear – you can either reject austerity or stay in the euro, but you can’t do both.

These lessons are being learned in Italy. Beppe Grillo, a former comedian who now leads the country’s second largest political party, has called for Italy to abandon the “anti-democratic straightjacket of the euro” and return to its own currency.

It says a lot about the sorry state of the EU when even the Italians are turning distinctly eurosceptic.

Selfie preservation

I’VE visited a few tourist hot spots over the last few days and have been besieged by aggressive street hawkers thrusting their goods into my face at every one.

For my next holiday I am thinking of getting a T-shirt emblazoned with the words: “No, I don’t want to buy a sodding selfie stick!”