Italy: Renzi’s high-stakes gamble

Italy’s Prime Minister Matteo Renzi threw his toys out of the pram recently by saying he might withhold approval for the next EU budget if Brussels insisted on its fiscal targets.

When it comes to dealing with Italy, Europe's leaders appear to have infinite patience, say Regina Krieger and Jens Mnchrath in Handelsblatt. It breaches fiscal rules with "extraordinary regularity", is always asking for items to be counted as one-offs, and massages the figures to the point of parody. When Prime Minister Matteo Renzi threw his toys out of the pram recently by saying he might withhold approval for the next EU budget if Brussels insisted on its fiscal targets, he was tactfully ignored.

There is a simple reason for Brussels' forbearance. On 4 December there will be a referendum on constitutional change. The government proposes to trim the Senate from 315 directly elected members to 100 appointed or indirectly elected regional councillors and mayors. The powerful Senate is deemed a key reason why Italy has had 63 governments since the second world war. The hope is that if it can no longer turf out the executive, it will become easier to pass long-overdue structural reforms, ranging from slimming down a Byzantine state bureaucracy to deregulating several cosseted and complacent industries and making the labour market more flexible. These should give the stagnating economy a long overdue fillip. The economy has declined by 2.1% since 2002, says Bloomberg.com's Lorenzo Totaro.

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Andrew Van Sickle
Editor, MoneyWeek

Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.

After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.

His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.

Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.