Germany isn’t the only EU country where serious ongoing economic problems are leading to political gridlock. Italy’s situation is no better, and arguably worse. This ‘worse’ aspect was pushed into the headlines yesterday by the resignation of Economy Minister Domenico Siniscalco. This is sending shock waves throughout the entire Italian political system. It still isn’t clear at the time of writing whether the Berlusconi government can survive, especially given the gravity of the underlying problem which is the need to make severe budget cuts when Italy is in a prolonged recession and elections loom sometime next spring.
This week promises to be another ‘busy’ one. Today the EU finance ministers (Ecofin) are meeting in Luxembourg, to discuss the condition of the common currency after last week’s ‘battering’ in the press and in the financial markets. Also headed for Luxembourg is EU Economics Commissioner Joaquim Almunia. Amongst other items he will have one in particulr which is high on his agenda: a meeting with Italian Ecomy Minister Domenico Siniscalco. Almunia is due to present a report on Italy’s deficit situation to the Commission tomorrow, and will almost certainly recommend the initiation of an excess deficit procedure under the revised terms of the stability and growth pact. Continue reading →