16 December 2014

Opposition to the euro is growing in Italy

In Spain and Greece, parties such as Podemos and SYRIZA are topping opinion polls. We have labelled these parties ‘shadow Eurosceptics’ – i.e. they are not openly against the single currency, but support economic policies  that are incompatible with euro membership. And then there is Italy, where a growing number of parties are publicly voicing opposition to the euro.

Anti-euro parties in Italy are currently worth around half of the vote

Lega Nord has been campaigning for quite some time to set Italy free from the “euro cage.” After a financial scandal brought the party to its knees, support for Lega Nord is on the rise again under the charismatic leadership of 41-year-old Matteo Salvini. Fratelli d’Italia, a smaller right-wing party, also wants Italy to leave the euro.

Significantly, the Five-Star Movement has moved to the openly anti-euro camp. Last week, Beppe Grillo announced that his party would start collecting signatures to hold a referendum on Italy’s membership of the single currency – in which the Five-Star Movement would campaign for euro exit. Such a referendum is currently forbidden by the Italian Constitution – but the number of signatures the party will be able to collect will be an interesting litmus test.

The latest opinion polls show the Five-Star Movement is nowhere near the impressive 25.6% it won in the 2013 Italian general election. There is also some uncertainty over the future direction of the party, especially since Grillo admitted on his blog that he is “a tad tired” and apparently inclined to gradually relinquish leadership to a ‘board’ of five MPs. That said, the Five-Star Movement remains Italy’s largest opposition party and would still win a significant share of the vote in an election.

Silvio Berlusconi, who has toyed with euro exit in the past, has recently floated the idea of introducing a “parallel currency” that would be printed in Rome and would allow Italy to get back at least part of its monetary sovereignty.

Take these four parties together, and according to the latest opinion polls we are potentially looking at an anti-euro bloc worth around half of the vote in a general election.

Anti-euro parties
Other parties

Support for anti-euro parties in Italy

According to the latest opinion polls, around half of Italians would vote for parties more or less sceptical of the euro.Source: Euromedia Research poll, 7 December 2014
Anti-euro parties
Other parties

Support for anti-euro parties in Italy

According to the latest opinion polls, around half of Italians would vote for parties more or less sceptical of the euro. Source: IPR Marketing poll, 9 December 2014

Renzi and his party almost on their own to defend the euro in Italy

So who’s left to defend the single currency in Italy? There’s Prime Minister Matteo Renzi’s Democratic Party, along with a couple of smaller centrist parties. Interestingly, though, some dissenting voices have arisen from the left wing of Renzi’s own party. Stefano Fassina, who served as Deputy Finance Minister in the previous Italian government led by Enrico Letta, has recently suggested considering a coordinated  dismantling of the single currency absent radical changes in the Eurozone’s economic recipe.

Moving from the political class to the public, the picture does not seem to change much. According to the European Commission’s latest Eurobarometer survey, Italy and Cyprus are the only two Eurozone countries where a relative majority of respondents think the euro is “a bad thing”. Italy was also the country where the share of people who think the euro is a bad thing increased the most, as it went up by 9% from 2013.

Generally speaking, do you think that having the euro is a good or a bad thing for Italy?

A bad thing 47%
A good thing 43%
Can't decide 9%
Don't know 1%
Along with Cyprus, Italy is the only Eurozone country where a relative majority of respondents think the euro is a bad thing.Source: Flash Eurobarometer, October 2014.

Will Renzi adopt a tougher anti-austerity stance?

Whichever way you look at it, support for the euro appears to be dwindling in Italy. Will this have an impact on Renzi’s positioning in the wider debate over EU fiscal rules and flexibility? There’s no election looming and the Italian Prime Minister’s Democratic Party is retaining a clear lead in opinion polls – which would suggest he is not under immediate pressure.

However, depending on how polls evolve and how serious the risk of a party split over EU-mandated austerity grows, Renzi may well decide to adopt a tougher stance at the European level. The ‘axis’ with French President François Hollande hasn’t been particularly successful so far, but a strong showing for SYRIZA in Greece (if snap elections took place early next year) and Podemos in Spain would definitely change the political landscape. Would Renzi be prepared to align with these parties and build up a proper anti-austerity Mediterranean bloc? Far too early to tell, but it could mark a defining moment for the future of the Eurozone.