Rome has been locked in a bitter battle with Brussels over its controversial budget plans, with latest action seeing the European Commission threaten disciplinary proceedings unless Italian debt can be reigned in. The Commission has urged Rome to make its debt more sustainable by cutting its structural deficit. Debt in Italy now stands at 132 percent, and is the second largest in the eurozone after Greece. The Commission forecast this figure will rise further to 135 percent next year.
Its structural deficit, which should have decreased by 0.6 percentage points this year under EU fiscal rules, is instead projected to worsen by 0.2 percentage points.
Speaking to Express.co.uk, three analysts chose Italy when asked which country was most likely to ditch the euro.
Michael Brown, senior markets analyst at Caxton FX, described the country’s heavily eurosceptic coalition government – made up of the anti-establishment Five Star Movement and right-wing Lega – as appearing to be “on a collision course” with the EU.
As well as the ongoing budget dispute, he said Italy appeared more likely to leave the euro area than anyone else after a proposal to create mini-BOTs, a parallel currency to run alongside the euro and be used by the government to finance its debt obligations.
Mr Brown said: “Rumours abound that this ‘currency’ could be used to facilitate the country’s departure from the euro at a later date.”
Critics have echoed similar concerns for the small-denomination bills, with no expiry date, while economy Minister Giovanni Tria, said creating mini-BOTS would be either illegal or useless.
However, both the League and its government partner the 5-Star Movement, accused Tria’s ministry of doing nothing to resolve the problem of unpaid state arrears.
Ricardo Evangelista, senior analyst at brokerage ActivTrades, said southern European nations have “suffered the impact of the euro-imposed budget restrictions” more than others, highlighting Italy as well as Greece as examples.
Deputy Prime Minister Matteo Salvini, who heads up the League party, this week went as far as saying: “We don’t need to ask Germans, Spanish and Luxembourgish for money.
“We want to use Italians’ money for Italians.”
But Mr Evangelista argued Italy is a eurozone country who stands to lose the most, at least in the short term, should they leave the euro.
He said: “They rely heavily on other Euro nations for their trade and a change in currency would be extremely disruptive.”
Touching on the anti-euro sentiment expressed by Mr Salvini, Neil Wilson, chief analyst at Markets.com, said: “Italy is probably the most likely [to leave first] – you see from Salvini and co there is no love for Europe.”
Speaking last October, Claudio Borghi, the economic head of the ruling League party, suggested Italy could have a brighter financial future outside the eurozone as he deemed the common currency “not sufficient”.
Mr Borghi, who chairs the budget committee of the lower house of parliament, said in a radio interview: “I’m truly convinced that Italy would solve most of its problems if it had its own currency.”
The comments from Mr Borghi sent stocks plummeting worldwide as Italian assets came under pressure.
His quotes were then downplayed by Prime Minister Giuseppe Conte, who said there are no plans for Italy to have their own currency.
He said in a Facebook post: ”The euro is our currency and for us it is unrenounceable.”