Italy: new hope or protracted decline?

All eyes will be watching to see if Italy's next prime minister, Matteo Renzi, can push through much-need reforms.

It's business as usual in Italian politics. Late last week, the prime minister, Enrico Letta resigned, having been ousted by the mayor of Florence, Matteo Renzi, as leader of the centre-left Democratic Party (PD).

Early this week, Renzi was asked to form a government by Italy's president, Giorgio Napolitano. It will be Italy's 65th administration since 1945. An "optimistic way" to look at this apparent coup in the PD, says Economist.com's Charlemagne blog, is that Renzi "is bursting with energy" and may be able to push through crucial reforms that eluded Letta.

Italy is in deep trouble. The economy has barely expanded in 20 years and is still growing too slowly for Italy to start making a dent in its debt mountain of 130% of GDP, which has raised fears of eventual bankruptcy.

The list of long-delayed structural reforms includes liberalising the service sector to foster competition, making the labour market more flexible and cutting taxes on businesses. A revamp of the electoral law to make governments more stable is also on the agenda.

A key problem, however, is that Renzi "will have to rely on the same fractious coalition", an alliance of centre-left and centre-right, that "hobbled" his predecessor. And he has never even served in parliament.

The "dysfunctional governmental system has a way of defying" would-be reformers, warns Alan Johnston on BBC.co.uk. We should know quite soon, says FAZ.net, whether Renzi represents new hope or just another symbol of Italy's protracted decline.

Recommended

What next for Haiti after its president was assassinated?
Global Economy

What next for Haiti after its president was assassinated?

Haiti, the poorest country in the Americas, has had more than its share of turmoil over the years. Its latest president was assassinated in July. Is a…
31 Jul 2021
The charts that matter: bitcoin rises and a mixed week for tech
Economy

The charts that matter: bitcoin rises and a mixed week for tech

Tech stocks suffered a volatile week. Here’s how it affected the charts that matter most to the global economy.
30 Jul 2021
The crisis brewing in emerging markets
Emerging markets

The crisis brewing in emerging markets

Covid-related political unrest and financial collapse in the developing world are the biggest threats right now, says Matthew Lynn.
25 Jul 2021
The charts that matter: what happened to reflation?
Economy

The charts that matter: what happened to reflation?

Government bond yields turned down this week, while the US stock market hit new highs, as “reflation” trades wilted under the pressure of concerns ove…
24 Jul 2021

Most Popular

Why the UK's 2.5% inflation is a big deal
Inflation

Why the UK's 2.5% inflation is a big deal

After years of inflation being a financial-assets problem, it is now an “ordinary things” problem too, says Merryn Somerset Webb. But central banks st…
16 Jul 2021
The MoneyWeek Podcast: Asia, financial repression and the nature of capitalism
Economy

The MoneyWeek Podcast: Asia, financial repression and the nature of capitalism

Russell Napier talks to Merryn about financial repression – or "stealing money from old people slowly" – plus how Asian capitalism is taking over in t…
16 Jul 2021
Three companies that are reaping the rewards of investment
Share tips

Three companies that are reaping the rewards of investment

Professional investor Edward Wielechowski of the Odyssean Investment Trust highlights three stocks that have have invested well – and are able to deal…
19 Jul 2021