Italy is close to finally getting a government but it could threaten the very existence of the eurozone

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Italy looks set to finally get a government, led by a coalition of two Eurosceptic populist parties, the Five Star Movement and the Northern League.
A leaked draft policy paper on the two parties’ plans for government showed discussions about leaving the euro.
Both parties have denied they plan to pull out of the single currency but the fact that discussions were even held is a worrying sign for the eurozone.
Italy is one of the key pillars of the project and without its full support, the euro could be on shaky ground.

After more than two months of deadlock, Italy is finally close to appointing a new government, led jointly by populist parties the Five Star Movement and the Northern League. A deal between the two is expected some time this week.

Five Star, which is the single biggest party in the Italian system, fell far short of being able to govern alone but will lead the coalition. The League will be an unofficial junior partner in what will be a ruling coalition unlike any seen in a major European economy for many years.

The coalition could, if circumstances dictate, end up pulling Italy out of the euro and threatening the stability — and possibly even existence — of the entire eurozone project.

It’s a slim possibility but one that cannot be ruled out, especially after a leaked agreement between the two sides showed discussions have taken place about Italy abandoning the single currency.

Matteo Salvini, the League’s leader, is thought to have been more forthright in his desire to abandon the eurozone, while Five Star’s 31-year-old leader, Luigi Di Maio, is a highly pragmatic leader who has shifted his political allegiances frequently.

The leaked report, published in part by the Huffington Post, shows the parties discussed a commitment to leave the euro but on Wednesday …read more

Source:: Business Insider

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