Adventures in Europe: Italy rails, as France wails

Italy's populists are enraged at the double standards from the powers that be in Europe. France appears to get a free pass, while Italy gets a telling off over its budget deficits. Brexiting from all this may not be quite so bad, non?

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Yellow is the new colour of Europe
Timwork
Tim Hedges
On 18 December 2018 13:26

Kemal is from Pakistan. He might have papers or he might not; nobody knows. But everyone tolerates him because he does something useful: he is a one-man walking market.

He is to be seen in supermarket carparks and walking the streets, pushing a clothes rail from which hang umbrellas, jeans, T-shirts, Christmas gifts.

The other day, presumably to improve personal safety on these dark afternoons, he was to be seen in a high visibility jacket. Everyone was delighted: ‘Hey, Kemal, you’ve turned French!’. Only council workers in Italy wear high visibility jackets and even those look as if they have been styled by Armani.

The Italians are enjoying the schadenfreude of the gilets jaunes protests, which are given plenty of prominence on their television screens. Politics here are often a little lively; Italians willingly take to the piazzas. But when the French want to screw things up there is no one even close; they are rioters and wreckers sans pareil. No one seems to know quite what this is all about, but they are torching cars anyway. It makes for great television the other side of the Alps.

And the presidential thing looks odd to Italians. President Mattarella is an elderly, white haired constitutional lawyer who makes speeches urging social unity and to help the poor at Christmas. He’s a bit like the Pope. Macron, by contrast is young, shifty looking and lectures people from a golden desk. He is easy to dislike, as the French themselves have found.

Pleasingly, Macron has had to apologise to the protesters and appease them with state cash. And this, to the delight of the coalition running Italy, is going to mess up the budget.

First, Italy told Brussels it would run a deficit of 2.4% this year, something which was roundly condemned by the unelected European Commission. Negotiations are continuing but it looks likely to finish at just over 2%.

Now France, which was already going to come in excessively high but to which the Commission was going to turn a blind eye, believes it will have a budget deficit of 3.5%, in excess of the 3% limit imposed by Brussels.

Pierre Moscovici, EU Commissioner for Economic Affairs, has said that Italy must not deviate from the agreed norm, but that France is a quite different case. Doubtless Monsieur Moscovici is a Commissioner first and a Frenchman second, but Deputy Premier Matteo Salvini is not sure.

Salvini, who, with a 30% backing is the most popular politician in Italy and one of the most popular in Europe, rails that the ‘EU must do fewer things and do them better’, and doesn’t want to cut the Italian budget by one lira (oops! I meant one euro). In particular he is enraged at how Italy is treated with respect to France.

France has broken the deficit ceiling each year since 2008. It has received no more than a tut-tut from Brussels. Italy has not just received a formal warning this time -- for a lower deficit than France’s -- but in 2011 the EU conspired to bring down the then Berlusconi government.

Of course, the EU believes that France will soldier on, whereas it believes Italy is at crisis point. However it also believes that France is way, way more important. There is a leitmotif in all Commission workings that the EU (‘Europe’ as they call it) is an association between France and Germany with some others tagging along.

Italy is the third largest economy in the Eurozone and has a population roughly that of France. It desperately needs to inflate its depressed economy and, given Mario Draghi’s cancellation of the quantitative easing project, the proposed deficit may not now be enough.

They, the Commission, the German Bundesbank, think they must continually limit Italy’s spending and, more important, be seen to do so, even if people starve.

Effectively, the Commission is saying that the democratically elected government may not put into action its mandate. Macron, by contrast, is allowed to cause riots by his de haut en bas attitude, and then break the Budget ceiling paying the rioters off.

This is going to be seen by the doubters in the Czech Republic, in Hungary and Poland, and considered with trepidation. What are they to think? Someone should tell Mrs May that if she delays a bit longer there will be nothing to remain in.

Tim Hedges, The Commentator's Italy Correspondent, had a career in corporate finance before moving to Rome where he works as a freelancewriter, novelist, and farmer. You can read more of his articles about Italy here

 

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