If Italy out of the Euro ... Jacques Sapir
The possibility of an outflow of Italy's Euro exit that could occur in the late spring of 2015, is more often mentioned in the international press, of course Italian but also German, US1 and Columbia2. The silence of the French press is all the more deafening ... must then understand why the Euro destruction process could start with Italy, and what would be the consequences for France.
An untenable position
It is now clear that the situation in Italy has become untenable in the context of the single currency. Italy is immersed in a situation of stagnation in GDP since the 2008 crisis that seems even more serious than what is known in Spain.
Graphique 1
Source : Base de données du FMI, octobre 2014.
The situation is particularly critical if you look at Italy's productivity gains compared to its competitors in the Euro zone since 1999. It is noted that Italy is lagging behind, not only in relation to Germany and France but also in relation to Spain. In this country, however, the closure of many companies has led to the disappearance of less productive and, here, the gain in productivity can directly be explained by the effect of the contraction in output.
Source : Base de données du FMI, octobre 2014
In fact discussions with economic advisers to the government Renzi show that they are now very pessimistic about the country's economic future. They believe that, except to know a turning point in German economic policy this winter, Italy will have little choice but to leave the Euro to summer 2015. Note that a party, the Movimente 5 stelle Beppe Grillo, calls for a referendum on the euro, and that this idea is gaining ground in Italian politics.
Italy is a large part (55% of trade in goods and nearly 64% counting services) of its foreign trade with the countries of the Euro zone. It is therefore understandable that the decline, relative, of the Euro against the dollar did not benefit. The Italian economy suffers from a problem of competitiveness within the euro zone.
The consequences for France
If Italy had to make this decision, the consequences would be important to the French economy. Due to specialization comparable to that of the Italian economy, it is hardly possible for France to stay in the Eurozone if Italy comes out (and vice versa). But this economic reality is likely to face in the stubbornness of a government that is paralyzed by the fear of his political strategy to collapse at that time. Here we must repeat that nothing would be worse for France than to stay in a euro zone that is then reduced to a Mark area, if one of the larger countries, and Italy is the third largest economy in the eurozone, was out. The adverse shock competitiveness would certainly be disastrous for French industry.
Therefore, think such a scenario and ask if he does not, in fact, an important opportunity for the French economy. If France and Italy come together in the Euro zone, this will involve a short-term exit from Spain, Portugal, Greece and Belgium. Indeed, we immediately understand that Spain, which is weakened by deep political tensions could remain in the Euro if Italy and France went out. However, an output of Spain implies that of Portugal, and after these four countries retention Euro Greece is no longer justified. Given its links with the French economy, it is very likely that Belgium should follow after a few weeks of hesitation. An output of Italy well cause the breakup of the euro zone and Germany, most likely, would resume its currency. But this scenario, far from being a disaster, would immediately open new opportunities and in particular the possibility - once the parities of currencies of these countries stabilized - to reconstruct a trading bloc. It should not be based on a single currency (a "Euro-South"), which has already had the opportunity to say that it would involve a very strong depletion of Italy and Spain, but should rather be based on co-variation of exchange rate rules being acquired as the respective parities of the countries of this bloc could be revised regularly (every year) to reflect the different movements in productivity.
It is therefore necessary to closely monitor the evolution of the debate in Italy in the coming months, especially the way the French press, on which alas! it is no longer no illusions, will notice.