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Political news swinging the balance in the financial sector is hardly a uncommon scenario. Italy’s recent poll reflected the 5-Star party and far-right league winning more than half of the votes. With both parties being heavily critical of the EU and its single currency economy, conclusions were jumped on the 1st actions the moment either party won. A coalition was attempted to avoid a stale government but with no prevail. We are now looking to July for another vote.

 

Naturally with the recent outcome, the polls are leaning towards 5-Star or the Far-right league taking favour with a referendum to follow to satisfy the peoples views.

 

What if they chose to leave?

When we look at Italy and its formation within the EU, it arguably is one of the foundations for the single currency economy. In comparison to the UK whilst we contributed to the union, our economy retained its native currency reducing the impact on our coming departure. Italy on the other hand then has to address their stance on currency, do they/can they revert to the Lira? Could they/would they retain the Euro to avoid a currency breakdown for the EU? Or would they support an entirely new currency?

 

In addition to this, Italy has less internal laws on an exit which could see them leave the EU before us! Would they opt to play nicely as the UK has done and look to retain relationships and support for the EU or have a hard exit?

 

In addition to this you begin to see a ripple effects with talk of the federal reserve holding back on the well overdue rate rise. Lets not forget that Federal hike would greatly support our own rate rise would is essential to boosting our economy on the final(potential) exit in March next year.

 

All in all it’s certainly a watch this space. In the UK we are used to waiting, it’s what we do best! I can’t foresee Italy taking their time if the people are calling for a referendum. With a party in power that has less than nice things to say about the EU, one worries of the bias that could steer that vote.

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