Euro-rebuke wounds Prodi's pride
EMU membership: European Commission says 13 countries, including Britain, will make the grade
Thursday 24 April 1997
Qualifying for monetary union on time has been the policy backbone of Romano Prodi's government, and failure will almost certainly spell its downfall. But yesterday the politicians could barely put a brave public face on the Commission's conclusions. Only Mr Prodi had the courage to call them "incomprehensible". The financial markets barely reacted.
According to the Commission's calculations, Italy will be close but not close enough to the 3-per-cent deficit-to-Gross-Domestic-Product ratio stipulated by the Maastricht treaty by the end of this year. It is then set to slide backwards towards a ratio of 3.9 per cent in 1998.
The Commission report did not rule out Italy's chances, but it made clear that further deep structural changes in the economy would be necessary to put the country back in the running.
The report was a stinging assault to Italy's pride. It is hardly flattering for a G7 country to be relegated below Spain and Portugal and left floundering just above Greece in the European pecking order.
The writing has been on the wall for some time. Because of the byzantine and contradictory architecture of Italy's governing coalition, last month's mini-budget completely failed to deliver the austerity medicine that was needed, resorting instead to statistical manipulations that fooled nobody.
The same political difficulties almost scuppered the Italian-led intervention force which is now in Albania - an operation intended to boost Italy's international credibility but which has turned into banana-skin hell.
The latest slip-up was a cruel but accurate illustration of the government's general discomfort: the Italian flagship, the Vittorio Veneto, spent all of Tuesday and part of yesterday stuck on a windswept sandbank outside the port of Vlora.
Mr Prodi's only chance of survival is to undertake a massive reform of the bloated, inefficient welfare state by the end of the year. His government is willing, but the party on which he depends for his majority in the lower house of parliament, Rifondazione Comunista, opposes any cuts in public spending in the name of monetary union.
Two likely scenarios present themselves. According to the first, the impasse continues, Italy is left out of Europe and the government falls. According to the second, the Prodi government draws up a welfare reform programme, Rifondazione votes against and a crisis looms. The centre-right opposition then comes to the rescue, offers to vote for the welfare reform package but insists on the government's resignation as the price.
Either way, Mr Prodi's days are numbered. Whether Italy's prospects in Europe can be salvaged while his supporters set about the task of dumping him remains to be seen.
Leading article, page 17
- 1 What happens to your body when you give up sugar?
- 2 Have sex with your iPad thanks to the new sex toy no-one asked for
- 3 The 'sex selfie stick' lets you FaceTime the inside of a vagina
- 4 Why you're almost certainly more like your father than your mother
- 5 Westboro Baptist Church couldn't picket Leonard Nimoy's funeral because they didn't know where it was
Durham Free School: 'Creationism taught at' free school facing closure
Nearly 100,000 of Britain's poorest children go hungry after parents' benefits are cut
End of the licence fee: BBC to back radical overhaul of how it is funded
Nigel Farage promises Ukip will not 'stigmatise' would-be migrants – and says he wants 'everyone to speak the same language'
Ex-head of MI6: 'We shouldn't kid ourselves that Russia is on a path to democracy'
Most people think legal tax avoidance is just as wrong as illegal tax evasion, poll suggests
£16000 - £18000 per annum: Recruitment Genius: They are an award-winning digit...
£45000 - £55000 per annum + benefits: Ashdown Group: Senior VMware Platform En...
£10000 - £16000 per annum: Recruitment Genius: A distributor of specialist ele...
£17000 - £19000 per annum: Recruitment Genius: A distributor of specialist ele...