Billionaire investor George Soros is worried about the consequences of Italy’s coalition government that was formed between the populist Five Star Movement and the right-wing League. At recent meetings such as the Trento Festival of Economics and the European Council on Foreign Relations, Soros said the European Union (EU) could collapse if it doesn’t handle this situation with tact.
Soros isn’t the only global leader worried about the new government taking over in Rome. Many believe Italy is “too big to fail,” so if it attempts to break away from the Eurozone, it could drag the EU with it.
Although Italians have faced economic stagnation over the past few years, the country remains the third largest in Europe. Italy also has one of the largest debts in the EU at 160 percent of its GDP. Youth unemployment in Italy currently stands at 33 percent and a staggering 67 percent of Italians between the ages of 18 and 34 still live at home with their parents.
The rate of growth in the Italian economy is a mere 1.6 percent per year. This is nowhere near the level necessary to help reduce Italy’s high unemployment numbers and mounting debt.
Current statistics also show about one-third of Italians favor getting rid of the Euro currency. Only Greece has a higher number of people who want out of the Eurozone.
Many economic experts believe the only way for the EU to survive this crisis is for leading states like Germany to take more fiscal responsibility for ailing member states like Italy. Keynseian economists are now suggesting Germany encourage reflation in southern countries through increased spending.
Besides the economic concerns, however, Italians are also worried about the increasing numbers of economic migrants pouring into their country from the Middle East and Northern Africa. Matteo Salvini, the head of the League, has made it clear that one of his main goals is to deport at some 500,000 illegal immigrants already in Italy.
Only time will tell how Brussels officials respond to the new right-wing leadership in Italy.