“Italy tried to quit euro five years ago and now faces worse situation, economist claims”

Simon Osborne, express.co.uk, 18.10.2016

Former Italian prime minister Silvio Berlusconi was holding secret talks to get his country out of the Eurozone five years ago, according to a leading German economist.

Hans-Werner Sinn, former president of the German Ifo Institute for Economic Research, has painted a grim picture of the Italian economy and warned it faces a struggle to survive such a 'catastrophic situation'. He said Mr Berlusconi realised the Italian economy could not survive within the single currency back in the autumn of 2011 and saw no alternative to pulling out as quickly as possible. But he was booted out of office later that year when a series of financial and personal scandals caught up with him – leaving Italy firmly attached to the euro. Professor Sinn said the situation for Italy today was probably worse than when Mr Berlusconi instigated the secret negotiations. He said: "Since 2011, the economic situation of the country has not improved. Indeed, it is still not competitive and in the past decade it has not even made efforts to be competitive." He said Brexit meant abandoning the single currency was no longer the 'blasphemy' it was at the start of the decade. He said: "The decision of the British people confirms the reasons for the warning cry that Berlusconi launched in 2011 for the progressive separation between this European Union and the reasons, interests and passions of the people that compose it." Prof Sinn said Italy has little cause for optimism with a lack of action to tackle the country's deepening financial crisis. He said: "In Italy there are many discussions but no actions. Industry produces 22 per cent less than it did before the crisis, youth unemployment reaches 40 per cent and bankruptcies increase from month to month. "A country cannot endure such a catastrophic situation. I really wonder how long the country will manage to be in the eurozone as half of the country now wants to leave." The economist said 'forced or desired' exit from the eurozone was always a possibility but warned a Greek-style bail-out would cost Germany around €4,500 billion.

Read on: www.express.co.uk