World Economy
0

Italy’s New Gov’t Facing Daunting Challenges

Italy’s New Gov’t Facing Daunting ChallengesItaly’s New Gov’t Facing Daunting Challenges

Italy’s Five Star Movement and the Lega party managed to form a coalition government June 1, after months of talks following parliamentary elections in early March. The government, led by Prime Minister Giuseppe Conte, is the first “populist” government to lead a major European Union country.

Italy, the fourth-largest economy in Europe, is only now slowly recovering from its worst recession since World War II, and the Italian economy remains smaller than it was prior to the 2008 financial crisis, Dailysignal reported.

Unemployment remains a consistent problem. Italy’s jobless rate is 11.2%, and youth unemployment is a staggering 33.1%.

Italian banks retain high levels of bad debt, leading to worries—albeit somewhat lessened recently—of a looming Italian banking crisis.

Public discontent with the economy and concerns over the euro are palpable. While a majority of Italians continue to support staying in the eurozone, support for the euro is lower here than in Austria, France, Ireland, Germany, Greece, the Netherlands, or Spain.

Italian debt was a staggeringly high 131.8% of the gross domestic product in 2017, and EU officials have already warned that the government’s spending plans, if carried out, would conflict with eurozone budget rules.

The government’s fiscal priorities will better come into focus when its budget is released in October.

Five Star has supported policies such as increased welfare payments, and it has campaigned on a promise to create a universal basic income of at least €780 (about $910) a month for people over 18 who are out of work and have an income below the poverty line, a proposal that is estimated would cost Italy tens of billions of euros every year if enacted.

  Ongoing Migrant Crisis

While Italy’s economic woes are important to understanding this anti-establishment mood, the ongoing migrant crisis remains the single-most important issue in the country. Like most of the rest of Europe, Italy has been heavily affected by the ongoing migrant crisis.

The relative closure of the Balkan route (a route from Turkey to Greece, and northwards through Macedonia and the western Balkans to Austria and Germany) and a security vacuum in Libya have combined to result in tens of thousands of migrants, many from sub-Saharan Africa, voyaging across the Mediterranean and landing on Italian soil.

Since 2011, 750,000 migrants have arrived in Italy, a country of 60 million—roughly the same population as California and Florida combined.

Both Five Star and Lega campaigned on platforms that promised to address the migrant crisis and its effects on Italian society.

Add new comment

Read our comment policy before posting your viewpoints

Financialtribune.com