Mr Monti has decided he can no longer survive as unelected Prime Minister of Italy, without a working majority in the Parliament. It was always an odd idea that an unelected “expert” could parachute into the job of Prime Minister without having taken the precaution of building a majority party and winning a General Election first. Now it appears that MPs in the Italian Parliament are no longer willing to go along with what he wants to do.
It will be interesting to see if the Italian General Election will bring to the fore important debates about the future of the Euro scheme and its impact on the Italian economy. Will Italy vote for more of the same? Will they vote for remaining in the Euro and applying more of the austerity medicine that goes with the current version of the currency? Will anyone campaign for withdrawal from the Euro? Will anyone say that the current budget and banking policies being followed within the Euro scheme are combining to throttle the Italian economy?
The issue before the Italian electors is in essence a simple one. Will they continue to do whatever the EU demands, as the price of Euro membership? Are they happy with the current results of these policies, measured in many lost jobs and falling output? Or do they think the current Euro sceheme is not working? Do they want Germany to contribute more by way of transfer payments? Do they want the ECB to print more money? Do they want cross guarantees to support all Italian banks? Should Germany inflate more to help correct the lack of competitiveness in the south?
I suspect they will choose another government which signs up to the full Euro scheme for fear of worse. Now is their opportunity to have the debate they need to have over why the current Euro scheme is not working economically for them or the other southern states. Their current levels of youth unemployment are worryingly high. Many forecasters now expect another two years of Italian recession.