The European Union continues to come under fire for pushing austerity plans designed to fix the continent’s overriding economic problem: stagnant growth combined with escalating deficits. But voters in individual countries are growing increasingly resentful at decisions imposed by remote control from Brussels.
The recent Italian national election is the latest shock wave in the growing rebellion against the Eurocrats. Voters soundly rejected austerity and gave a large majority to political parties that opposed the policies of Prime Minister Mario Monti. Ambrose Evans-Pritchard comments in the Telegraph:
Almost 57pc of the Italian vote went to parties that have vowed to tear up the EU austerity script. Together they control a majority of senate seats. The Five Star movement of comedian Beppe Grillo, which won 25pc of the vote, has called for a euro referendum and has a return to the lira as one of its manifesto pledges, while ex-premier Silvio Berlusconi has threatened to pull Italy out of the currency bloc unless the EU switches to a reflation strategy.
Monti was installed as Prime Minister after feverish behind-the-scenes maneuvering by the EU’s political elites, sensitive to German pressure as the Greek debt unfolded. He pushed the austerity program to comply with the EU’s directive of bringing the country’s annual deficit to less than 3% of GDP. Italy is suffering economic contraction in its wake, while the “one size fits all” 3% target is causing increasing resentment with the public, aware that Italy’s overall debt picture compares favorably with other EU countries, including France.
Italian critics of the EU advocate dropping the euro and returning to the lira, which would constitute an old-fashioned devaluation. Currency devaluation was always the traditional method for restoring equilibrium to debt markets before the creation of the euro. While a euro exit is unthinkable for the continent’s elites, who remain committed to the single currency for ideological reasons, the new political reality in Italy makes it a distinct possibility.