Euro and EU face next existential threat from Italy as poverty triples over decade

The election of the independent and centrist candidate in the French election rejuvenated the European Union and the single currency, which recovered from its slump around 1.06 against the dollar to 1.145 against the dollar. However, Eurozone’s, as well as the European Union's biggest existential threat, wasn’t from France, though, it was a crucial test for the bloc and the Euro-skepticism. The biggest test lies with Italy, where an election will be held by sometime next year. Even before the French election, the market was pricing a 33 percent chance that France will exit the European Union or the Eurozone, however, that number was 50 percent for Italy.

One of the reasons for high Euro-skepticism in Italy has been the lack of growth. The Italian economy has barely grown since the adoption of the euro. The latest poverty report is also not very encouraging. According to Italy’s National Institute of Statistics (ISTAT), the number of absolute poor in Italy rose to 4.7 million last year against almost 1.7 million in 2006. The figure represents 7.9 percent of the country’s population with most of them living in southern regions. In the south of the country, 9.8 percent of people were living in absolute poverty, compared to 7.3 percent in central areas including the capital Rome, and 6.7 percent in the north, including the business capital Milan, the report shows. The report also reveals the level of absolute poverty increased among younger people, reaching ten percent in 18 to 34-year-old group. However, the number of poor dropped among seniors to 3.8 percent in the age group of 65 and older.

In the period from 2008 to 2013 Italy passed through the deepest and the longest recession since World War II. The crisis erased over 25 percent of the country’s industrial production and the unemployment rate grew from 5.7 percent in 2007 to 13 percent in 2014. Though the unemployment rate has declined in recent months, it is still hovering at 11.3 percent as of May this year and wage growth has been declining since 2008.

The latest opinion polls suggest that in the next election, the incumbent pro-EU Democratic Party will lose its top position to Euro-skeptic Five Star movement.