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Last Updated: Thursday, 27 January, 2005, 13:05 GMT
Italy's dolce vita turns sour

By Katya Adler
BBC News, Rome

For non-Italians, Italy is a country associated with sunshine, good food and heady romance - the dolce vita.

The Spanish Steps in the Italian capital, Rome
Despite the sunshine, Romans are feeling the economic chill

But Italians are not finding life so sweet these days, according to a recent BBC World Service poll.

Italy floundered at the bottom of a global survey of citizens' economic outlook.

According to the business daily, Il Sole 24 Ore, four out of five Italians are sceptical that their economy will improve this year.

So why are Italians feeling so pessimistic?

Well for starters, their economy - the fourth largest in Europe - has remained more or less stagnant since 2002.

The majority of Italians say they blame their misery on the euro and on their government for doing nothing to control euro-related price hikes.

Euro woes

"The euro is a nightmare," said Bruno, an office worker, as he sipped his early morning cappuccino in a Rome cafe bar.

"Prices have more than doubled. Take this coffee for example."

Read key points and see graphs from the World Service poll.

"It's even worse than that," added his colleague Massimo.

"The lira sign was simply substituted with the euro sign. A trolley full of food at the supermarket that cost you 40,000 lire became 40 euros overnight.

"Even though that was way over the official conversion rate. That was three years ago when the euro was first introduced.

"But it's got worse since then. Prices have gone through the roof while our wages remain the same, pegged to the old lira."

Wherever you go in Rome's bars and restaurants - on the bus or in the street - people tell you the same thing.

"It breaks my heart in my local grocery store," said Carla, a hairdresser.

"I keep seeing pensioners at the cash till in a terrible state when they realise they can't pay the bill."

And they are not alone.

Embracing credit

Surveys run in the Italian media show nearly half of Italian households have trouble making ends meet at the end of the month.

Ten or 15 years ago, it was impossible to use credit cards here.

Virtually no one accepted them. Now Italians live off them.

"Buy now, pay in 2007!" scream adverts in newspapers and on television.

A growing number of Italian families say they are drowning in debt.

Very few Italians save money.

A stark contrast to the 1990s, when Italians put aside an average of 20% of their incomes each year and they came near the top of the list of Europe's best savers.

Those who do have cash to put away say they have little faith in Italy's often erratic banking system.

And the service costs you dear.

Banking shambles

Adusbef, the Italian Society for the Protection of Bank Users, has just published figures showing that you actually lose money on the average current account because of the high service costs.

Despite this you would think at least Italy's businessmen and industrialists should be doing well, if the euro means they pay low wages at the same time as putting up their prices.

Except that people have now stopped buying or paying for services they can no longer afford.

Here in Rome restaurateurs grumble that business is slow.

In those days though, when prices went up, our wages did too. That's not what happens now with the euro
Giovanna, waitress

Shops have extended their sales period, after a disappointing Christmas.

Retail sales in Italy fell in December for a fifth month running, according to Bloomberg, despite traditionally being one of the busiest shopping periods.

This spells disaster in a country where consumer spending accounts for about two-thirds of the $1.7 trillion economy.

In an effort to boost household spending, Italy's centre-right government has just introduced some much-heralded tax cuts.

But compared to the fanfare, the cuts are miserly.

A total of 6bn euros ($8bn) has been shaved off income taxes.

That is too little to really benefit taxpayers, but enough to strain the economy even further, according to Giada Giana of Intesa SpA Bank.

Silvio Berlusconi
Italians hoped Berlusconi's business skills would bring prosperity

But let's be realistic, modern Italy has rarely been associated with a burgeoning economy.

The last economic boom here was in the 1960s - the true time to live the Italian dolce vita.

After that, when times were hard, successive Italian governments simply printed more money. Inflation was rampant.

Tourists to Italy could barely keep up with all the zeros on price tags.

"In those days though, when prices went up, our wages did too. That's not what happens now with the euro," says Giovanna, a waitress.

"Also the euro makes us feel helpless. Italy can't take action without the approval of Brussels.

"In the good old, bad old days, we printed more money. Now we just stare at shop windows, not daring to go in."

Cutting corners

This lack of spending power is perceived as traumatic in a country where the phrase "life's necessities" takes on a whole new meaning.

Here the bella figura (perfect image) is everything.

Italians have always been inclined to cut corners if need be to buy flash-looking watches, cars or designer clothes.

They holidayed at home and the cost of living was cheap.

Now with the introduction of the euro, they say, there are no corners left to cut.

Yet Italy could not have been more euro-enthusiastic before the introduction of the new currency.

They saw it as the next step in EU-integration and most Italians believed that was a positive thing, bringing increased wealth and stability.

Many Italians will tell you their current pessimism is born of disappointment - not just in the euro, but also in their government.

Midas or meddler?

Silvio Berlusconi's dynamically-named "Forza Italia" (Go Italy) coalition was elected to power three and a half years ago because people here believed he could turn the country's fortunes around.

A smooth-looking billionaire businessman, then president of the powerful AC Milan football club, it seemed everything Mr Berlusconi touched turned to gold.

Few Italians appeared bothered by the rumours of shady dealings.

Mr Berlusconi persistently escapes prosecution and in Italy a furbo (sly fox) is often admired.

Now though many of his voters say they feel let-down.

"We thought he'd run Italy like his other successful businesses," says Marco, an entrepreneur.

"We dreamed of a new and shiny Italia Inc., but he's just used his power to benefit himself and his friends. The rest of us Italians have been dumped out in the cold."

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Country profile: Italy
12 Dec 04 |  Country profiles


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