Crisis brewing in Italy will lead to default, exit from the euro, or both – Telegraph.co.uk

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Crisis brewing in Italy will lead to default, exit from the euro, or both – Telegraph.co.uk



An Italian flag in front of a European flag


Credit:
PHILIPPE HUGUEN/ AFP


Last week’s data showing a drop in Italian GDP in Q4 of last year confirmed what many observers had already suspected: Italy is in recession. Or rather, in another recession, for this follows similar phases in 2008, 2011 and 2012. Where is this going to end?

Although we have got used to weak economic performance from Italy, for much of the post-war period Italy grew rapidly. In 1987 its GDP even briefly overtook the UK’s. It subsequently dropped down the international league tables so that by the time the euro was formed in 1999 it was already a weak performer. But the euro has made matters worse. Since its formation, Italy has grown by only 9pc. By contrast, the poor old UK, self-excluded from…

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