Italy Referendum Creates New Crisis for EU

GettyImages-609877472
(AFP) – Italy’s centre-left government has slashed its growth forecasts for this year and next, nine weeks before a make-or-break referendum that could deepen the European Union’s existential crisis. Speaking late Tuesday after a cabinet meeting on updated budget plans for 2017, Prime Minister Matteo Renzi said he was now making a “prudent” prediction of growth of 0.8 percent for this year and one percent for 2017. That compares with figures of 1.2 percent and 1.4 percent forecast by the government in April. The downward revisions follow data last month indicating that the economy ground to a halt in the first half of this year. Independent economists say Italy will struggle to hit even the revised targets given weak domestic demand, the crisis facing the country’s debt-laden banks and the fallout from Britain’s “Brexit” vote to leave the EU. Italy’s economy has barely grown since the country became a founder member of the eurozone in 1999. That stagnation has hammered the purchasing power of working and middle class voters. As salaries have trodden water, the cost of a pizza in Rome has trebled. The rise of energy prices has been sharper, hitting pensioners on fixed incomes particularly hard. That is