The recently minted Italian government has made headlines for its harder stance on migration issues – and its willingness to go toe to toe with the EU to fight for what it sees as a more equitable distribution of burden sharing when it comes to welcoming refugees. But it’s the underlying problems in the Italian economy that are more problematic. These are by no means new problems, but what’s changed is that an Italian government has come to power that is more Euroskeptic than any previous government. Now the government, an admittedly weak one in terms of domestic support, is in the process of drawing up its first budget – and in doing so, it may pose a fundamental challenge to the European Union.
Like previous Italian governments, the governing alliance between the Five Star Movement and the League wants more control over monetary policy and government spending so that Italy can address its chronically mediocre growth rates and its high stock of nonperforming loans. (We woul