Europe’s Debt Crisis Arrives in Italy
Soeren Kern: Will Italy become the next European country to need help managing its debts? “There is no quick fix for the two most immediate problems ailing Italy: the country’s towering national debt and extremely poor prospects for economic growth.”
Italy is the seventh-largest economy in the world and the third-largest economy in the euro zone (the group of countries which use the euro as their common currency). It is also the third-most indebted country in the world after the United States and Japan. In its European context, Italy’s mountain of debt is more than that of all the other so-called PIGS (Portugal, Ireland, Greece, and Spain) group of financially troubled countries combined.
At 120 percent of GDP, Italy’s debt is the EU’s second-largest by that measure after Greece, which has a debt-to-GDP ratio of 150 percent. Italy’s €1.8 trillion ($2.5 trillion) debt, which is equal to the country’s national income, poses an unsustainable economic burden that will push Italy into the abyss if the government’s debt servicing costs keep rising.
Bloomberg quotes Finance Minister Giulio Tremonti: “Like with the Titanic, even the first-class passengers can’t be saved.”
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