Proof that anti-EU sentiment is not confined to the UK
THE size and status of Italy’s upper house of parliament is not the most obvious subject of interest outside that country but few really think that Sunday’s referendum – fought over that and related issues – was really just about constitutional reform. It is clear that many of the 60 per cent of Italians who voted treated it as an opportunity to express disgust at the way in which the political elite has treated them.
There are many problems facing Italy but what was the biggest issue as Prime Minister Matteo Renzi saw it? That he didn’t personally have enough power and that parliamentary democracy should be weakened. The Italian people treated his attempt to gerrymander the political system with the respect it deserved – forcing Renzi’s resignation.
While his country has been in economic crisis for years Renzi stuck doggedly to Italy’s membership of the euro – even if it means his country’s economy going to the dogs. It is not hard to see why there is such anger.
Italy stands as a sad reminder that – contrary to what Britain’s Remain campaign tries to make out – EU membership is no great route to prosperity. The Italian economy has never emerged from the euro crisis, spending the past decade veering between stagnation and contraction. In real terms the Italian economy is 12 per cent smaller than in 2007. It is back to the size it was in 2000, the year after Italy joined the euro.
YET the EU’s political establishment cannot seem to see that the euro is part of the problem. Prior to the euro the Italian currency could have responded to economic crisis by devaluing, as it had done many times since the war. The large denomination lira notes became the butt of jokes – even paupers were millionaires in Italy. Yet it was devaluation of the currency which kept Italian exports competitive. Now Italy no longer has that ability.
The value of its currency is fixed within the eurozone. As a result, exports have remained uncompetitive and the country’s manufacturing base has collapsed. Unlike Britain, Italy does not have a buoyant services sector to compensate for the decline in manufacturing. Unemployment, at 11.5 per