Italy is a sorry shadow of its former self. Italy’s economy has shrunk by approximately 12% since the financial crisis of 2007. Overall unemployment is 11.5% and youth unemployment stands at 36.5%, far above the Eurozone rate of 20.8%. Italy was not always in such bad shape. Between 195070, Italy was a powerhouse of economic growth and in 1987 its GDP passed that of the UK, an event termed by the Italian press as “Il Sorpasso” (Italian for “the overtaking”) and prompted wild celebrations in the streets of Rome. However, over the last two decades, Italy’s economy has essentially stagnated. Is the Euro to blame for Italy’s current economic mess? Only partly, in the sense that a weaker currency would certainly help Italy grow faster, create more jobs and provide the favourable backdrop needed to carry out unpopular reforms. The Euro may have made the Italian economic situation worse but it certainly isn’t the root cause. On the other hand, years of rampant corruption, lack of reform on the labour, judicial and economic fronts, most certainly are. What Italy needs is a “Yes” vote in this Sunday’s referendum. What it will likely get is a “No”, more upheaval and surprises that will threaten the Euro and the foundation of the European Union in the years ahead.
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