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EU Economics

Italy’s economy growth drops to ZERO as bank crisis grows

ITALY’s economy ground to a complete halt in the second quarter of 2016 in a huge blow for the country’s embattled Prime Minster and his fragile banking sector.

italy renziGETTY

Italy’s economy is in trouble


Matteo Renzi pledged that financial growth would help to bring Italy’s debt-laden economy back from the brink of collapse.But now it’s been revealed the country’s economy stagnated between April and June in the lowest quarterly growth figure since emerging from a three-year recession at the beginning of last year.

The eurozone’s third-largest economy is looking increasingly close to crisis as banks battle to stay afloat amid around £270billion of bad loans – a third of the eurozone’s total.

The leader is reportedly now set to beg Brussels to give him room put measures in place to prop up the economy.

The indebted banks are also lending less to companies to help them grow, making it harder for the economy to return to health.

Yet earlier this month, Renzi was questioned over bank weaknesses and told CNBC: “Growth, growth, growth… This is my priority, my dream and my nightmare.”

The flat-lining economy means official forecasts for growth and cutting sky-high public debt are ever harder to reach and mark a particular failure for Renzi.

Alberto Bagnai, economic policy professor at the University of Chieti-Pescara, said: “There is no way to solve the banking problem without economic growth.

“If the whole nation doesn’t start earning more it can’t pay back its debts – public or private.”

A referendum on constitutional change, which the prime minister has put his job on the line over, is looming before the end of the year.If the leader loses the vote over he has promised to resign, in a move which is set to send the country into chaos.

But in an apparent attempt to backtrack Renzi said this week that personalising the vote had been a mistake.

Credit ratings agency DBRS said it has serious concerns about the uncertainty of the outcome.

Polls show voters split almost equally on the proposal.

At the same time the anti-EU Five-Star Movement has been growing in popularity.

http://www.express.co.uk/finance/city/699448/Italy-economy-growth-drops-to-ZERO-as-bank-crisis-grows

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