Everyone thinks they know the script of how Italy’s saga will play out. As the populists take power in Rome, they will rail against Brussels, try to fight austerity, come up with some bold plans for reforming the euro, and hold a referendum or two. And then they will meekly cave in as Angela Merkel and the European Central Bank, the euro-zone’s equivalent of Gordon Brown’s ‘big clunking fist’ from a decade ago, bring them to heel. After all, that’s what happened in Greece when Syriza took power. A lot of fighting talk was followed by a dismal surrender, and five years of budget cuts, tax rises, and unending recession.
But there is a chance that Italy will be different. Why? Because it is a far bigger economy? Because it has a trade surplus? Because its debts are so enormous – a trillion euros owed to the rest of euro-zone – that it holds a stronger hand? Those are all important factors, and may well help.
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