Italy is taking steps to move closer to regaining sovereignty lost since replacing the Lira with the Euro. Italy has struggled more than economists expected and Italian politicians often blame the Euro as well as Eurozone monetary policies for their malaise. The country is home to the third largest economy in the Eurozone and since the election of its populist government which forged an unlikely alliance for the time being, has increased its tough anti-EU and anti-Euro stance.

The Italian economy slipped into a recession in the fourth-quarter of 2018, data released Istat showed. A recession is usually defined by two consecutive quarters of negative growth. Fourth-quarter Italian GDP contracted by 0.2% quarterly or twice the expected contraction, which followed the third-quarter’s decrease of 0.1% quarterly. While economists anticipated technical recession, the severity of it may suggest a worse economic foundation moving forward.

The European Union is extremely frustrated with Italy and now decided to express their frustration with economic estimates. The European Commission released a report with their estimates for GDP growth across the EU and stated that it currently expect the Italian GDP to expand at 1.2% in 2019. This is below the Italian government’s GDP estimate which shows a growth rate of 1.5%. According to the European Commission report, Italy’s debt-to-GDP ratio will increase to 2.9% in 2019 and to 3.1% in 2020 while rejecting Italy’s estimate for a debt-to-GDP ratio of 2.4%.

How many remember the Greek debt crisis? It lasted almost a decade with many pinning the start at October 4th 2009 after the center-left PASOK party won elections while some EU bureaucrats like to claim victory with the last bailout payment which was supposed to arrive in Athens on August 20th of 2018 at which point Greece exited its bailout. Greek finances where a mess and debt-to GDP ratio soared to nearly 180%.During that period, Greece saw GDP contractions almost every year, unemployment soar and incomes shrink.

Italy may have another election as soon as this September as Italian President Sergio Mattarella rejected the Finance Minister picked by the coalition formed after election results a few weeks ago. Initially, Luigi Di Maio, the leader of the Five Star Movement, and Matteo Salvini, the leader of the Northern League, ruled out a coalition.

Italy is one of Europe’s biggest economies and a key anchor for the Eurozone behind Germany and France. It is also the economy which has never fully recovered from the last financial crisis as Italian banks are still loaded with bad loans and the Italian consumer is hesitant to open its wallet. Italy also has the second highest debt-to-GDP ratio with 131.1% as of 2014, trailing only Greece.

With the Brexit mood souring again as EU President Donald Tusk is visiting the UK and the start of March ringing in the final twelve months of Brexit negotiations before the UK will leave the world’s largest trading bloc, the EU, some may not pay as much attention to what could move the Euro next: Italian elections. Italians will go the polls on Sunday, March 4th and many Italian voters are still undecided.

EUR prices down almost to $1.05 level at the beginning of the new trading week after the publication of the first results of the referendum in Italy on the issue of constitutional reform of the country. The last time the European single currency was so cheap in the spring of 2015.