As I have observed in the past, the Italian economy can withstand an end to the low interest rate regime with no risk to economic activity or the public finances, provided that fiscal policy remains anchored to stability and that the reform process aimed at strengthening the economy continues.
Growth potential The growth gap between Italy and the rest of the euro area is a structural problem that cannot be resolved through monetary stabilization policies or by an expansionary fiscal stance. Its main cause is the low productivity of firms which have lagged behind in responding to the drastic technological changes that began a quarter of a century ago.