Will Matteo Salvini wreck the euro?

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Will Matteo Salvini wreck the euro?
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They call Matteo Salvini Il Capitano. No Italian can fail to hear an echo of Mussolini’s nickname, Il Duce

here...he’s arrived! He’s arrived!” bawls the mayoral candidate, as a sea of blue and white flags declaring, Italy First, wave in the summer evening air of the ancient Umbrian hill city of Orvieto.

There are two favourite enemies: migrants and Brussels. As he revs up the crowd in Orvieto , Mr Salvini takes swipes at both. He tells listeners that he respects the right of people to believe in other gods, “Just so long as that God does not come and tell me that women are worth less than men and that they must go around in a burqa.” Vast applause ensues. “MoreSince taking the additional post of interior minister in the coalition government, Mr Salvini has used his powers to clobber migrants.

This has the markets and other European governments spooked. Mr Salvini’s confrontation with Brussels waxes and wanes, but never goes away; and until he abandons it, the threat to the euro zone itself is real, and potentially deadly. In the past Mr Salvini has spoken of a desire to take Italy out of the euro, and perhaps even theitself, which he has called a “gulag”. That is not his current policy, doubtless because there is no majority support for either.

Twice now Brussels has threatened to penalise Italy for its excessive debt, and twice the government has meekly toned down its deficit plans. In autumn last year ten-year government-borrowing spreads over German bunds approached 3.4 percentage points, leading the coalition to curb its deficit plans for 2019 from 2.4% to a cunningly precise 2.04%. In June Brussels made threatening noises again as it became clear that Italy’s debt ratio had risen in 2018, rather than fallen.

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