If Brexiteers need a real reason to leave the EU, just look at Italy

Steve Sedgwick
Follow Steve
ITALY-BANKING
Source: Getty

As the painful and quite frankly embarrassing stumble out of Europe continues for the UK, I watch with sadness at the pathetic lack of conviction of both the previous Remain and pro-Leave camps.

It’s never been easier for this journalist to sit on the fence in splendid apolitical isolation given that the pro-Brexit camp doesn’t actually believe a word that they are saying any more.

Brexiteers seem to be tacitly admitting that their previous grandiose promises are in tatters, whether it’s the now non-existent money tree for the NHS, or the failure of Germany to cave in over threats to tariffs on imported BMWs. And let’s not even go there on immigration.

Mind you, the “Remainers” grumble on unconvincingly about now accepting the word of a Great British population that has definitively spoken and therefore must be respected. Utter codswallop. If you have the courage of your conviction, then fight, you weaklings.

If you really believe it is a cataclysmic slide of our country into irrelevance internationally and depression domestically, stick to your guns. What happened to politicians with balls, conviction and principles?

As the spurious Brexit mantras of sovereignty and halting the flood of foreign labour are clung to desperately, I wonder why one of the few legitimate concerns about the EU is rarely touted as a good reason to get out.

I’m talking about the fact that – not unlike post-referendum Britain – parts of the European continent are in an economic death spiral. Everyone knows it but keeps hoping that it will magically go away.

Italy is a complete basket case economically, and with €2 trillion worth of public debt, it’s still the great bale of straw on the camel’s back that could take the whole project down.

Italy refuses steadfastly to modernise. It refused to go with constitutional reform last year, a reform that one top Italian chief executive told me was a “meta reform” essential to unlock the rest of the country’s ascent into the twenty-first century.

Italian banks remain mired in hundreds of billions of non-performing loans. From BMPS (Banca Monte dei Paschi di Siena) to the most recent Veneto bank bailouts, the lie that these rescues are “one-offs” is rolled out. Why weren’t they allowed to collapse without state intervention?

Read more: ECB to do "whatever it takes" following Brexit vote

The truth is we all know that if one goes then the whole rotten apple cart could tip. And as for Italy’s state itself, has it taken the European Central Bank’s promise of “doing whatever it takes” to scythe through its horrific debt pile? Has it heck.

Italian debt is still at a ratio of 133 per cent to the value of the country’s GDP. As the Institute for International Finance put it last week, the banks are “still vulnerable to shifts in market sentiment, and the possibility of a negative spiral of rising refinancing costs and deteriorating debt sustainability assessments.”

So all you Brexiteers can have this one from me free of charge. If you want a real reason to fear the EU, stop bleating on about Brussels illegitimacy and how hordes of European diasporas are apparently ruining our country.

Instead take a look at the fact that there are one or two economies in Europe that may be in a worse position than “good old Blighty” and may just scupper the European project with or without the British.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

Related articles