It has become fashionable to identify Italy as the “sick man of Europe” and to forecast catastrophic scenarios; the country defaults on its debt, leaves the eurozone, etc. However, a closer look at Italy’s main problems – in public finance, competitiveness and structural reforms – reveals that, while serious, they do not justify the doomsaying.

The main weakness in public finance is that Italy has a high public debt to gross domestic product ratio, rather than an “excessive” deficit. Italy’s fiscal deficit has, over recent years, actually been similar to that of France and Germany (between 3 per cent and 3.5 per cent of GDP since 2001).