The Italian drama is a danger for the euro zone

Italy has never been able to successfully integrate in the euro zone. The shortfall in corporate investment and the resulting stagnation of productivity have led to a continuous deterioration in cost competitiveness that it has obviously been impossible to correct through a depreciation of the exchange rate , which was the case in the past. So Italy has a twofold supply problem: potential growth is zero due to the stagnation of productivity, low skills and population ageing, and cost competitiveness is poor. This has resulted in zero growth on a permanent basis, with the resulting political and social tensions, and low corporate profitability that worsens the under-investment. Moreover, in a situation of zero potential growth and no inflation, Italy’s fiscal solvency cannot be ensured, even with the ECB’s very expansionary monetary policy. Italy therefore has no fiscal space and is constantly threatened by another public debt crisis. There is therefore clearly a twofold threat stemming from Italy for the euro zone: an economic and therefore political threat, and a financial threat.