Observatory on the European Union: Italy After The Elections and Within The EU

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“The government of change”, this is how the new Italian government, which lies on the agreement between the 5 Star Movement and the Northern League, is being referred to. Italians asked for change, Italy definitely needs change. However, will the changes promised by the populist alliance be in the right direction?italyaftertheelections-1
The worrying socio-economic outlook affecting the peninsula has been clearly described by Josep Borrell, former President of the European Parliament and Spain’s new foreign minister, during the Round Table of the Observatory on the European Union held at IE on the 29th of May. Firstly, as he reported, Italy is affected by a concerning inequality problem, with the top 1% of the population owning 25% of the total wealth and the bottom half owning only 5%. It is interesting to notice with respect to this purpose that the new government is planning to introduce the so-called flat-tax, which means taxation with a single rate for everyone. There are some positive aspects related to the measure, such as the possible increase in consumption and a simplification of the tax system. However, the flat-tax, by reducing the progressiveness of the tax system, will be the cause of an increase in inequality, not to mention the burden it will create on
the public debt.

The issue of the excessive public debt has also been raised by Borrell. Currently at the worrying level of 132% of the GDP, this figure is the second highest in Europe after the Greek one. Even if the debt is held by Italian for its majority and even if we still cannot even think about a default possibility, the new programs that the new government is planning to introduce will contribute to an increase of this figure. Indeed, apart from the flat-tax, among the other measures which will excessively increase public spending, the citizenship income is definitely the most popular one. However, respecting the EU 3% deficit limit is not a priority for the majority of the Italians. All they see is increasing poverty, inequality and unemployment. Europe is seen as far and helpless, especially on the front of the illegal immigration. Indeed, many European countries lacked solidarity with respect to this matter and Italy, struggling with his own resources, has often been left alone dealing with the problem.italyaftertheelections-2
The two populist parties did a great job in terms of riding the wave of growing anti-European sentiments of part of the population, indeed the Euro and the European governance are given the majority of the responsibilities for the current negative situation. If we also consider the aversion towards the two traditional parties of the the center-right and center-left it is easy to understand the great success of the 5 Star Movement and the League. The growing distance from the two more moderate parties, Forza Italia and Partito Democratico, is not just due to the fact that they represent the so-called establishment. Indeed, as Euprepio Padula, CEO of the management consulting firm Padula & Partners, mentioned during the Round Table, the two parties suffered negatively due to the personification with the two respective leaders Silvio Berlusconi and Matteo Renzi. Berlusconi is internationally known for the multiple scandals associated to his private and public life and Renzi also enjoys a negative image in the peninsula due to his association with a banking scandal and to unpopular reforms introduced during his service as prime minister.

Notwithstanding the huge success in the elections, the the 5 Star Movement and the League did not have the numbers to form a government singularly. The last 31st of May, however, 88 days after the elections (the longest period in the history of the republic), the new government, born form the alliance of the two populist parties, was formed. It is probably too early to understand whether the promises made by the two parties during the campaign will be respected. However, one of the first action taken by the newly elected minister of the Interior Matteo Salvini was to close Italian ports to a boat full of African migrants. This might really be the new direction and the arm wrestling with Europe is probably about to start.