Filmed by Petros Gioumpasis. Produced by Josh de la Mare.
The development of Italian Euroscepticism is a stunning event. This was certainly the most Europhile, the most passionately committed of the larger countries that uniformly believed that being part of the European Union in every respect, which is why it was so desperate to get in the eurozone in the '90s, was vital.
So what's got wrong? Well, essentially, its performance in the eurozone. It had a very, very deep crisis after 2007. GDP per head fell by about 10%. GDP per head looks like getting back to 2007 levels sometime in the middle of the 2020s. The debt is over 130% of GDP. And of course, it's very, very dependent for what growth it gets on the ECB's policies, which may not last.
So if you think about where it is now and how massive the divergence has been from the northern Europeans, how weak the growth is, and the fragility of the situation, it's not surprising that the Italians have become very jaundiced as a people.
The crucial thing to understand now as a result of this election is that the established parties have been demolished. And now, of course, we have Cinque Stelle, the Five Star Movement, and the Northern League together likely to form a government. The crucial point about this is they are elected to reject the European consensus on policy.
They want to be allowed to spend more on things like universal basic income. This is a promise of Cinque Stelle, which is going to be very expensive. They want to roll back pension reforms, which the Monti government brought in, which were regarded as essential for making the Italian fiscal position credible. So all this is inevitably going to create a head-on conflict with the rest of the eurozone, including the European Central Bank.
If this were to generate a crisis in the debt markets for Italy, which could happen, it would be very difficult for the European Central Bank to do anything about it because they're breaking the rules. Nobody knows what's going to happen. it could lead to a monstrous crisis or it, of course, these people could all back down. But the frightening thing then is, well, if they all back down, maybe they'll be replaced in the next elections by even more extreme people.
The optimistic view about the future is the Italian economy is actually improving. And it will continue to improve with luck, as long as the eurozone does well. The - people will begin to calm down as they begin to feel a little bit more optimistic in Italy about the future. The government will do some things which look as though they're fulfilling some of their promises without breaking all the rules on fiscal policy, without reversing all the important reforms.
The eurozone will seem to be functioning again, and we will have forgotten these nightmares. I think that's a reasonable guess because the alternative of breaking out of the eurozone is just so horrifying and catastrophic. But it could be quite an exciting few years. And Italy is the big one. It is a country that can't be dealt with in the same way that the other crisis-hit countries were dealt with.