Italy explores bilateral Brexit deal with Britain as its own economic crisis nears danger point


By Ambrose Evans-Pritchard
The Telegraph, London
Sunday, February 10, 2019

Italy is drawing up emergency plans to safeguard financial stability and keep trade with the UK flowing even if there is a no-deal Brexit, if necessary through a bilateral deal between Rome and London.

The country's insurgent Lega-Five Star coalition is increasingly worried that a mishandling of the EU's Brexit crisis could push Italy's fragile economy into a dangerous downward slide and risk a funding crisis for its sovereign debt at a treacherous moment.

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Premier Giuseppe Conte has told his Brexit Task Force to focus urgently on ports, airports, customs, and the handling of food trade, as well as the status of Italians living in the UK.

Palazzo Chigi, the prime minister's inner machine, is exploring what Italy can do under its own authority to defuse the stand-off with Britain. While this is relatively straightforward for issues such as citizens' rights, it is unclear how it would work in trade and finance where the EU sets the rules.

Both the Lega and Five Star movement have Eurosceptic roots and are irked by the Brexit strategy of the European Commission, seen as rigid, ideological, and potentially explosive.

"We want the closest possible bilateral ties with the UK and certainly don't agree with any idea of punishment. You are our customer," said Claudio Borghi, the Lega's economics spokesman and chairman of the budget committee in parliament.

"Unfortunately we are not in charge of Europe, at least not yet," he said.

It is a perilous time for Italy. The economy is in a protracted recession. Risk spreads on its 10-year bonds are again nearing the threshold of 300 basis points, the level where trouble has begun in the past. ...

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