The ramifications of the banking crisis continues a decade on as Italy, once the richest country in Europe now the sick man of Europe, heads to elections tomorrow.
The Five Star Movement (M5S) might win the popular vote, but a majority in parliament would be unexpected, with polls suggesting a hung parliament is likely.
The centre right might be the biggest party of lawmakers if polls translate to votes, but no one will be able to govern alone. However, polls have not predicted an election for now many years. What the people of Italy will say remains very much to be seen.
A shock result would be parliamentary majority for M5S, which would place the euro very much into the spotlight and perhaps even EU membership itself.
Italian unemployment stands at 11%, far higher for youth unemployment. Their government debt level is the biggest in Europe after Greece. Some of their banks have still been receiving bail-outs as late as last year.
The euro is what many Italians blame because they can not set their own monetary policy, with the country’s money so bound to the far stronger German economy and even, to some extent, the French economy.
“We want to remain in the EU’s Economic and Monetary Union, but we want to discuss again a series of treaties linked to deficit-GDP,” the 31 year old leader of the 5-Star Movement party, Luigi Di Maio, said before adding:
“The German parliament has 45 officials in Brussels, while the Italian parliament has two and one will retire this year.”
They have dropped suggestions of a referendum on the euro in a uturn last month with Maio stating “an exit from the euro is not under discussion, much less leaving the European Union.”
But euro and EU will probably be their primary focus if the Italians give the party the required 40% majority, which may well happen.
Their last poll two weeks ago placed them at 28%, with Italian law forbidding any further polls so close to the election. But two weeks is a long time.
The situation has been tense in the country as many see it a decisive vote with “the Italian Farage,” Matteo Salvini of the Northern League, stating EU has “its last chance to reform itself.”
If the anti-establishment and popular M5S wins, the shock might not be as great as Brexit or Trump, but the established order would be once more rebuffed.
That might lead to uncertainty and the euro itself may be open to scrutiny in EU’s third biggest economy, potentially causing a euro sell-off as we saw with Brexit’s pound.
That would be the case even if the centre-right wins, which would be the biggest party short of a majority if polls translate into votes, as they will form a coalition with the very euro-skeptic Northern League. Just as it would be the case if M5S is given a majority.
That increased uncertainty, especially regarding confidence in the euro itself, might lead europeans across the continent to look for safer heavens, including potentially in cryptocurrencies like bitcoin or ethereum.
Everyone therefore will be looking with much anticipation at the results as Italy and Europe stand at a crossroad only two decades after the euro was launched.