The economic news from Italy continues to be grim. This week more negative data on consumer confidence and the trade deficit (the biggest since 1992, and it was of course in 1992 that Italy came flying out of EMU).
The ISAE research institute’s consumer confidence index fell to 100.9 in July from 102.9 in June, touching its lowest level in 13 months and underlying the public’s reluctance to make expensive purchases of property or durable goods.
Earlier this week Italy reported it had run a world trade deficit in the first five months of this year of ?6.28bn (?4.4bn, $7.6bn), the biggest imbalance between national exports and imports since 1992.
I suspect this comment won’t be welcome here but I have to say I’m entirely unsurprised by either the deep malaise of the Italian economy or the other problems across Europe in fact, I WOULD be surprised if the problems weren’t there.
It’s not that hard to see where the problem is. Had Germany, France, Austria and, maybe, the Benelux countries shared a currency it just might have worked but, when you have as disparate a collection of economies as those constituting the Euro Zone, it’s hardly a shock when it all goes pear-shaped.
Efforts to buck the effects of currency value movement are as old as currencies themselves but they’ve always failed in the end. Yes, there’s a short term benefit but, as ‘They’ do say, “When push comes to shove” you can’t govern an economy over which you have no fiscal control.