The politicians in Rome are getting restive, raising concern about the continued survival of the reforms being introduced by the new government. Separately, Italy has been described as the frontline for the battle to save the euro because, unlike the peripheral economies of Greece, Portugal and Ireland, Italy is too big to bail out.
At their inaugural conference in Rome last week, the party’s leader Renato d’Andria presented the policy as “a long overdue backlash against the power being wielded by Germany and France during the Eurozone crisis”, which culminated in the overthrow of Silvio Berlusconi and his replacement by the technocrat Mario Monti. D’Andria, a wealthy entrepreneur, branded the Franco-German inspired removal of Berlusconi as a “coup” and a “denial of democracy”.
Italy has a fundamentally sound economy, d’Andria said, “but political uncertainty has led the markets to lose confidence in our country and to impose upon us ruinous borrowing costs and austerity measures that conflict with social justice and will hurt the weakest in society the most. “We should quit the euro and leave the EU and take a leading role in a new organisation, a Mediterranean Union. Why should we stay in Europe, where we have no power and influence and where control if exercised by the French and the Germans, acting through the Commission in Brussels and the European Central Bank?
The PDSI is a small party with little political influence, having been sidelined by the rise of Silvio Berlusconi’s Forza Italia party. Its new policy is notable because it suggests a growing eurosceptic sentiment in Italy.
Fitch Ratings believes Italy will be the battleground for the survival of the Euro. In a note, the agency said “the future of the euro will be decided at the gates of Rome,” describing it as “the frontline of the crisis”. Fitch has Italy rated A+ on negative watch, but predicted the country would hold together and would avoid defaulting on sovereign debt.
In a vote at Fitch’s London roadshow event, about 44% disagreed, and said Italy would need a rescue package, but that it would prove too expensive and restructuring would follow. Panelist Erik Nielsen, UniCredit’s head of economics and fixed income, disagreed. He said: “If Italy has to restructure you will have US dollar / euro parity. There is not a chance in hell they will have to restructure.”