EU Economics

Italy MUST act NOW: IMF’s URGENT warning to EU as Italian debt hits ‘ALARMING’ levels

ITALY is in URGENT need of intervention in order to recover as the eurozone’s third biggest economy crumbles in the aftermath of post-Brexit, the International Monetary Fund has warned.

Italy is in the midst of a political and financial meltdown

GETTY     Italy is in the midst of a political and financial meltdown

The financial watchdogs described the nation’s fiscal debt as “alarming” and warned structural problems must be addressed “urgently” as it unveiled the fragile state of Italian banks.Italy is on the brink of financial and political meltdown and leader Matteo Renzi may be abut to push t over the edge by calling a referendum on constitutional reform in October, potentially plunging the already beleaguered European Union into fresh chaos.

Juan Toro of the International Monetary Fund (Fmi), said: “It is necessary to take significant measures in the recovery of credit.”

The country’s biggest challenge is the evasion of VAT, which peaks to around 30 per cent over 2 to 3 years.

Italy and EU flag

GETTY    Italy is a founding member of the EU

The IMF said “recovering old credit is very difficult” because tax is collected on a annual basis rather than the normal collection of VAT on a monthly basis, which creates a “subdivision and the duplication of revisions and inquiries”.The crisis comes as Italy’s bank shares plunged on Tuesday, showing signs they are suffocating under a pile of unservicable loans and a growing sense of political instability.

This could push Italy back into recession and, in a doomsday scenario, generate a Greek-type meltdown that Europe would find almost impossible to contain.

Italy's bank shares plunged on Tuesday

GETTY    Italy’s bank shares plunged on Tuesday

Mr Renzi has promised to resign he loses a referendum in the autumn in his bid to create a major constitutional change to Rome’s notoriously slow and costly system of government.

His departure threatens to shake the financial foundations of the nation and push contagion to other nations in the crumbling bloc.

Britain voted to leave the EU on June 23

GETTY   Britain voted to leave the EU on June 23

If the pro-EU Premier’s proposals are defeated, opposition parties who are determined to push forward a breakaway from Brussels, and with Brexit increasing anti-EU sentiment across the continent, they will prepare a fight to topple the union.

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