By: Indu Dubagunta

Europe has been struggling for almost a decade with its financial crisis. The financial crisis which has been in Europe since 2008, is the state where there were collapses of financial institutions and high public debt (government borrowings) in many of the bigger European countries. This all started when Iceland’s banking system collapsed in 2008 and this spread along to other major countries like Greece, Italy, and Portugal. Until now, this has not been of major concern to Italy but now it is turning into more of a problem.

These crises lead to fall in the value of euro and Brexit where Britain wanted to leave the European Union. Italy’s market became unstable after this move and along with the poor decisions of the government, the country’s situation worsened. Italy now is in very large government debt which they have said will have a maturity of 8 years.

Now in 2018, Italy is heading for it’s first ever all populist government which doesn’t have the perfect plan to improve the state of the economy. They were proposing a flagship policy which promised the poor a universal income that would cost the government almost 17 billion euros per year. The leader of the party stated that “the recipe for a lower public debt is by investments and expansionary policies”.

They are also imposing a flat tax of 15% for all firms and individuals which will cut their tax revenue by 80 billion euros per year. They also plan on not moving forward with the proposed pension reform, which would cost them 15 billion euros per year. This will prove to cause a budget deficit and will make their situation worse, dragging them deeper into the financial crisis.

Economists all over the world, especially in the European Union, think that these policies will only make the country’s state much worse than it is at the moment. They think if the financial crisis lasts, it will be as bad as the Great Depression of the 1930s. Whatever policies that Italy’s government or the European Union takes, the recovery of the economies of Europe is one which is very far from the present.

Author details:
I love Economics and Current Affairs. Writing articles like these and getting to know about the world and reality is a very interesting topic for me. I always look forward to research and gaining knowledge about our various countries. It just helps me put in my best to help the world around me and inspires me to make a change in the society.