by Roberto Orsi
This question is certainly worth exploring, not so much perhaps in sheer terms of policy options, as it will be argued, but especially because of the challenge that it represents against the background of the substantial immobilism displayed by European decision makers, at all levels, during the crisis.
After years of persistent deterioration of Italy’s economy, it is no surprise that, as in other countries of the Eurozone, the search for possible solutions to the on-going crisis has led to the emergence of a debate about the prospect of leaving the Eurozone and re-introducing a national currency. The debate mirrors the polarisation of the sentiments expressed by Italians towards the common currency, which have never been entirely positive. Still, today, eleven years after its introduction as physical currency (1st January 2002), the memory of the perceived sudden rise in many consumer goods prices has made the euro appear as the culprit of the steady decline in the purchasing power of Italian consumers.
Recent opinion surveys show that, as in other countries of the Eurozone, there is a sizable sector of the population, currently about 20%, that endorses leaving the euro as the way forward in order to re-start the economy. A more thorough articulation of this policy option has been envisaged by a relatively small group of economists and economic journalists, mainly Alberto Bagnai, Alberto Bisin and the controversial Paolo Barnard. Others, such as Loretta Napoleoni, have been advocating the break-up of the euro into two currencies, with a euro-2 for the southern economies. These positions are related to the critical views often expressed by leading economists, such as Joseph Stiglitz and Paul Krugman, and by the strategic analyst Edward Luttwak, about the damaging consequences of austerity policies and the opportunity of either re-thinking the whole system, or proceeding with some consensual divorce, perhaps with a German exit. Luttwak has recently articulated the view that, despite a high price to be paid in terms of domestic restructuring, Italy would be better off, in the long run, outside the Eurozone.
While attention on the Euro crisis has been focusing primarily on Greece and Cyprus, it is no mystery that Italy, alongside with Spain, constitutes the real challenge for the future of the common currency, in any direction events will be unfolding. In the relative silence of the international press, Italy’s macroeconomic situation has been showing no sign of improvement, and indeed numerous indicators portray a national economy which finds itself in a depression, rather than in a however severe recession. It is no overstatement that the Italian economy is currently collapsing.