Newsbeat in Italy: The Eurozone crisis

22/09/11

Italian flag

Greece, Ireland and Portugal have already had bailouts and now it's feared the Italian economy is teetering on the brink.

It has huge debts and many international investors believe it's getting riskier to lend Italy money.

The cost of Italy's debt has been rising as lenders have become nervous about its ability to repay loans.

"I'm very scared about the economy now, it's very bad," says taxi driver Peter Disantes.

He told Newsbeat he's driving around 35% fewer passengers than a few years ago: "I think we're going to lose a lot of what we had before."

I'm very scared about the economy now, it's very bad. I think we're going to lose a lot of what we had before
Taxi driver Peter Disantes

This week Italy's credit rating has again been downgraded - the equivalent of an entire country being credit checked for a new credit card and no longer being offered the best deal.

Analysts are worried it's creating a downward spiral. Where Italy has to pay more interest on its loans, which means it owes more money, so it has to pay more interest.

Many Italians are complaining about the situation. Outside Parliament a protest group waving Italian flags call for politicians to cut their salaries.

"We are bankrupt, that's our problem. We want to change the government." Protester Max Torrelo told Newsbeat people are angry: "Everyone is in a catastrophic situation. In Italy, in Spain and in Greece."

Bail out fears

The fear is the Italian economy could end up like Greece and need bailing out.

The problem is that, at the moment, the EU's bailout fund isn't big enough to cover it because the Italian economy is so big.

Anti-government protestor Max Torrelo in Italy
Image caption Anti-government protestor Max Torrelo says a change of government is needed

The Italian Government is trying to take action by cutting spending and raising taxes.

Twenty-three-year-old Anna Maria is a painter who's business is suffering.

She says there are less tourists and blames the bad economy on the politicians: "They are disorganised. We have problems with mafia, political mafia. That's the problem."

The UK and the rest of Europe are closely linked by trade and investment so problems in Italy could have a disastrous knock-on effect.

If the economy considerably worsened, then banks in Britain, Germany and France could be crippled by the Italian debt they've bought.