Sunday

21st Jul 2019

No euro crisis after Italian vote, says EU

  • Italian finance minister Pier Carlo Padoan (c) is expected to become prime minister. (Photo: Council of the EU)

EU officials are trying to defuse concerns that the Italian prime minister's resignation after a failed referendum will spur a new eurozone crisis.

"I think there is no reason to speak of a euro crisis," German finance minister Wolfgang Schaeuble said on Monday (5 December) before a meeting of eurozone ministers in Brussels, adding that financial markets should stay "relaxed".

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Schaeuble and other eurozone leaders insisted that Italian voters rejected only constitutional reform on Sunday, and that there was no political crisis in Italy after prime minister Matteo Renzi announced his resignation.

"It's a democratic process," stressed Eurogroup president Jeroen Dijsselbloem. "Let's wait for the outcome."

He added that the result did not "really change the situation, economically in Italy or in the Italian banks".

"The problems that we have today are the problems that we had yesterday and they still have to be dealt with," he said, referring to the large public deficit and debt and the high amount of bad loans in Italian banks.

"Italy is a strong democracy, it will take sound decisions," he said.

Financial markets seemed to confirm Schaeuble and Dijsselbloem's assessment, with the euro regaining during the morning the ground it had lost during the night against the dollar.

At midday, the main indexes in Frankfurt, London and Paris had increased by more than 1 percent, while the Milan stock exchange was losing 0.1 percent.


The Standard & Poor's rating agency said that Sunday's result "does not have an immediate impact on Italy's creditworthiness".

Accroding to Reuters news agency, a meeting was due to take place on Monday on whether to underwrite a €5 billion recapitalisation of Monte dei Paschi, Italia's most vulnerable bank.

Italian president Sergio Mattarella was expected to decide on Monday whether to appoint a new prime minister or hold snap elections.

Finance minister Pier Carlo Padoan is considered the most likely candidate to succeed Renzi, in a move that would reassure the EU and investors. He cancelled his participation in the Eurogroup in Brussels.

EU finance commissioner Pierre Moscovici said Padoan was "a man of high quality" and he was "sure" that Italian authorities were well equipped to face the situation.

"Italy is a solid country on which we really rely," he said.

Moscovici also dismissed the idea that the No vote in Italy was an anti-EU vote.

"It's not a Brexit vote, it makes no sense," he said, insisting that the referendum was on a domestic issue.

"Populists in Europe are always trying to turn any vote into a pro-EU or anti-EU vote, but they are wrong," he said.

He pointed out that the far-right was defeated in Austria's election on Sunday, and stressed that the victory of populism was not fated.

"They won't win in Italy or in France," he said.

Italy referendum spooks eurozone

Prime minister Matteo Renzi's resignation, followed by a crushing rejection of his reforms, has sent the euro plunging against the dollar and put the country's fragile banking system at risk.

Countdown to Italy's future

The long-running campaign for Sunday's referendum has wrapped up, but market jitters and the rise of euroscepticism risks Italy's shaky post-recession growth.

Italy's Renzi to stay on to pass budget

The Italian PM, who handed in his resignation on Monday, will stay in his job for a few days at least, amid calls for fresh elections and an uncertainty over the country's future.

EU hesitates to back France over US tariff threat

France has passed a new tax on tech companies that will affect US global giants like Facebook. Donald Trump has threatened retaliatory tariffs over it. The EU commission says it will "coordinate closely with French" on the next steps.

EU banks more vulnerable to shocks than feared

Eurozone banks, such as Deutsche Bank, might be much more vulnerable to a repeat of the 2008 financial crisis than EU "stress-tests" have said, according to a new audit.

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