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Tuesday, March 12, 2013

Beppe Grillo, the Five-Star Movement and the euro enigma: Episode 2,478

We have noted on this blog before that it would be a bit of a stretch to describe Beppe Grillo's Five-Star Movement as an anti-euro party - mainly because it has yet to adopt an official position on the issue. At the moment, not even the referendum on Italy's membership of the single currency appears in the Five-Star Movement manifesto.

According to an ISPO poll published by Il Corriere della Sera on Sunday, if this referendum were to take place in Italy, 73% of Five-Star Movement voters would opt to stay in the euro - and only 17% would vote for a return to the Lira. An overwhelming majority.

However, Professor Mauro Gallegati (see picture) - one of Beppe Grillo's closest economic advisors - gives a slightly different picture in an interview with French business daily Les Echos today. He says
The [Five-Star] Movement is still split over the euro. There is a good part of supporters who are in favour of an exit from the single currency. Personally, I’m against [euro exit] because I think the cost to the Italian middle class would be prohibitive. 
So to what extent the Five-Star Movement's electorate can be described as anti-euro remains unclear. But the poll and the interview both leave another key question unanswered. What do the Five-Star Movement's 163 MPs and Senators-elect actually think about the euro? This is quite hard to figure out at the moment, given that they are not allowed to speak to the press. But they may have to take a clearer stance sooner rather than later, not least because official talks on the formation of the next Italian government are due to kick off next week.

Follow us on Twitter @OpenEurope or @LondonerVince for the latest from Italy.


Anonymous said...

The best outcome for the Italian Middle class would be the exit of Germany from the euro....but that would involve another "new euro-sceptic" party in Germany.

Rik said...

The issue is not if they want the Euro. They want it as they simply donot trust their own government with their currency.
The issue is do they want to pay the price for that. And exactly like Greece they want their bill sent to Berlin.

Things donot work that way they have simply to make the choice Euro plus austerity and reforms or leaving. Their preferred option Brussels dealing with their government and Aunty Angela picking up the tab is simply not on the table.

There are some other options but those are again purely internally Italian get a proper government and get rid of the rubbish that calls the shots now.

jon livesey said...

To a large extent, this article manages to miss the point. The point is not what the Five Star Movement's policy is on the euro, but whether the policies it follows will make Italian membership of the euro impossible in the long run.

This is what the markets are currently weighing up. Italian yields are now closing in on Spanish ones, which indicates that the markets have comparable concerns for the two countries.

Spanish unemployment at 27% is far higher than Italian at 11%, but the Italian economy is contracting much faster, with a drop of 2.7% in GDP in the past 12 months compared to 1.9% for Spain.

Investors must be asking themselves what happens next if the Five Star Movement blocks austerity measures. The economy could level out, but the ECB might then withdraw support, with unforseeable consequences.

Compared to this, this rather arid and abstract discussion about the "official programme" of the Five Start Movement is pretty pointless.

Don't watch what they say; watch what they do.

jon livesey said...

A couple of other comments about Italy. Since 1999, Italian real GDP is up about 5% compared to over 20% for the euro-zone in general.

Currently, busineses in Italy are closing down at a rate of more than 1000 a *day*. Not per week or month, per day.


Rollo said...

Beppe Grillo is absolutely right: the bail-out is not for the benefit of Italy or Italians, but a means of saving Northern European banks from their disastrous investments in Italian Bonds. And, yes, when the Geramns and the French and Christine Lagarde have finished saving their own banks, Italy will be cast off.