EU crisis: Italy tipped to leave eurozone amid coronavirus panic

The eurozone economy of 19 EU countries barely grew at all in the final quarter of last year. An official estimate put economic growth in the region at 0.1 percent during the three months to the end of December 2019. Two of the eurozone’s largest economies also shrank in the period: France by 0.1 percent and Italy by 0.3 percent.

To further complicate matters, the coronavirus outbreak has taken grip of the boot-shaped country and will teeter Rome on the edge of recession.

As the intense struggles being experienced by some of the bloc’s most influential economies highlight the crisis the eurozone faces over the next couple of years, Lord David Owen explained in an interview with why the monetary union will soon collapse.

He said: “I personally don’t think it will survive.

“You survive by merging – that is the history of currencies that start off across groupings.

“The groupings merge.

“America had lots of different dollars at one stage and it took them 150 years to bring one currency for the whole of the US.

“But Europe is not America.”

The prominent Brexiteer added: “Now, maybe a federal Europe might happen and if there is a eurozone change, it will be to reduce the number of countries in that.

“It will be based on the Asiatic League.

“It will not be easy for Italy to be a member of it… not at all. Almost impossible.”

This week, Italy imposed sweeping nationwide restrictions on travel and public life, in a desperate attempt to contain the coronavirus outbreak that looks set to plunge the world’s eighth largest economy into a steep recession.

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The measures announced yesterday include travel restrictions on 60 million residents, a ban on public events, the closure of schools, cinemas, museums and gyms, and limits on opening hours for restaurants, bars and shops.

The Government took action as the number of deaths caused by coronavirus reached 827 and infections topped 14,000.

The restrictions are in place until at least April 3.

Jack Allen-Reynolds, senior Europe economist at Capital Economics, told CNN that Italy’s economy will contract sharply in the first half of the year – even if the restrictions are lifted at the end of April, with GDP declining by around two percent for all of 2020.

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The hit to GDP will be “much bigger” if the restrictions are extended until the end of June, he added.

He said: “This does not take into account the impact on the banking sector.

“The spillovers from the impact of the virus on other parts of the eurozone, or the potential supply-chain disruption if the virus really takes off in Germany and other key trade partners.”

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