"The level of prosperity in Italy is currently at the level it was in 2000. If nothing changes, the Italians may decide that they no longer want this Eurozone," Fuest told Tagesspiegel.
He also noted that a whole new set of problems for European taxpayers may arise if Italy turns to the European Stability Mechanism for economic aid, as earlier the European Central Bank (ECB) offered to buy an unlimited amount of Italian government bonds should Rome require assistance.
"Therefore, it’s the ECB that will decide the size of loan Germany should grant to Italy; under these circumstances the Bundestag definitely shouldn’t approve the ESM program," he said.
But even without the threat of Italy leaving the Eurozone, EU stability appears to be rapidly deteriorating, the Ifo chief added.
"The European Union is increasingly drifting apart. This has already become clear with the Brexit vote, but in the meantime, countries in the East are increasingly distancing themselves from Europe. This is dangerous, and what Europe really needs now is stability," Fuest explained.
He specifically pointed out that despite the regulatory measures previously implemented by EU authorities, European banks still remain quite vulnerable to the effects of financial crises, suggesting that Brussels should take pointers from the US in that area.
