European Economics

European Economics Focus

3 March, 2017

What if Italy left the euro-zone?

If Italy left the euro-zone, we think that its new currency would depreciate by about 30% against the euro. In the year or so following its exit, the economy would probably contract sharply, but we suspect that Italy’s medium-term prospects would be better outside the single currency area. It still seems most likely that Italy will remain a member of the euro-zone over the next couple of years. But political developments in Italy suggest that there is a risk of the country leaving the currency

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