The battle for the survival of the euro will be fought and won in Italy more than anywhere else. Mario Monti’s technocratic government is struggling to push through sufficient reforms to convince financial markets that economic growth will return and thus erode the country’s mountain of public debt. Unless EU institutions intervene in government bond markets to lower Italy’s cost of borrowing, Italy may soon be frozen out of those markets. And that could be the end of the euro: the EU’s bail-out funds have enough money to provide Spain’s financing needs for the next few years, but no spare capacity to save the larger Italian economy.

When the euro was conceived, more than twenty years ago, many economists thought the Italian economy ill-suited to take part. Then Italy’s reformist governments in the Nineties did just enough to convince its partners that it should be allowed into the single currency. But after the launch of the euro