To the casual observer, Italy may indeed seem to share many of the problems of its southern European cousins. Its public debt amounts to around 120 per cent of the size of its economy, second only to Greece in the eurozone. Its economic performance has been feeble for years, growing at an average annual rate of less than 0.4 per cent between 2001 and 2011. Its population is ageing rapidly, which could lead in time to a pensions crisis. Its stock market has one of the worst long-term records of any developed markets.
However, Italy does also possess some substantial, but often overlooked, virtues. Italian households are in much better shape financially than those elsewhere in Europe. Property prices never bubbled up as they did in Spain and Ireland, so mortgage indebtedness is modest. Savings are plentiful, while the banking sector is in decent enough health. Nevertheless, sentiment towards Italy could scarcely be more negative.