Italy’s Budget Standoff with the European Commission Explained

Italian prime minister Giuseppe Conte and Five Star Movement leader Luigi Di Maio listen as Finance Minister Giovanni Tria answers a question from a reporter in Rome, October 3
Italian prime minister Giuseppe Conte and Five Star Movement leader Luigi Di Maio listen as Finance Minister Giovanni Tria answers a question from a reporter in Rome, October 3 (Governo Italiano)

The European Commission has told Italy to revise its budget for 2019, accusing it of “openly and consciously” reneging on the commitments it has made.

This has been reported as the commission “rejecting” Italy’s budget proposal, but that is too strong a term. It has no such power.

Here is what’s really going on — and what is likely to happen next. Read more

Rome on Collision Course with European Allies, Financial Markets

Rome, Italy at dusk, October 17, 2008
Rome, Italy at dusk, October 17, 2008 (Andreas Caranti)

I cheered too soon. A few weeks ago, I reported that Italy’s populists were coming to terms with reality. Now they have introduced a spending plan that puts them on a collision course with the European Commission and financial markets.

Reneging on the commitment of the last government, the coalition of the anti-establishment Five Star Movement and far-right League, formed four months ago, proposes to run a deficit equal to 2.4 percent of GDP in 2019.

That is still below the EU’s 3-percent ceiling, but it is a reversal of the fiscal consolidation path followed so far and it means Italy’s public debt, already one of the highest in the world at 130 percent of GDP, will rise rather than fall. Read more

Italy’s Populists Come to Terms with Reality

Italian prime minister Giuseppe Conte attends a meeting with Five Star Movement leader Luigi Di Maio, August 15
Italian prime minister Giuseppe Conte attends a meeting with Five Star Movement leader Luigi Di Maio, August 15 (Governo Italiano)

Italy’s ruling Five Star Movement and League have shelved proposals for a universal basic income and flat tax, La Stampa reports.

Implementing either policy, let alone both, would have blown a hole in Italy’s public finances and broken the EU’s 3-percent deficit ceiling. Read more

When America First Meets Italy First

American president Donald Trump and Italian prime minister Giuseppe Conte arrive to a NATO summit in Brussels, July 12
American president Donald Trump and Italian prime minister Giuseppe Conte arrive to a NATO summit in Brussels, July 12 (NATO)

My latest post for the Atlantic Council’s New Atlanticist blog previews next week’s meeting between American president Donald Trump and Italian prime minister Giuseppe Conte.

Although the leaders got along well at the recent G7 and NATO summits, and share views on immigration, international relations and trade, I wouldn’t be surprised if the meeting turned out to be a disappointment.

On both military spending and trade — Trump’s pet peeves when it comes to Europe — Conte’s government opposes the American president. Read more

Populists Overturn Labor Reforms in Italy

Italian labor minister and Five Star Movement leader Luigi Di Maio eyes Prime Minister Giuseppe Conte during a news conference in Rome, July 3
Italian labor minister and Five Star Movement leader Luigi Di Maio eyes Prime Minister Giuseppe Conte during a news conference in Rome, July 3 (Governo Italiano)

Italy’s ruling populists claim to have made good on their campaign promise to overturn the previous government’s labor reforms.

A decree:

  • Reduces the maximum length of temporary work contracts from 36 to 24 months;
  • Reduces the times such contracts can be renewed from five to four; and
  • Introduces a requirement for employers to prove a temporary contract is still warranted after one year.

Italy’s National Institute for Social Security estimates that 8,000 temp workers could lose their jobs as a result of the changes, but the Five Star Movement and League have dismissed these figures as “unscientific” and “disputable”.

In the last year, Italy has added close to 460,000 jobs, 95 percent of which are on temporary contracts. Read more

Far-Right League Gains Most from Governing in Italy

Matteo Salvini, the leader of Italy's Northern League, gives a speech in the European Parliament in Strasbourg, April 29, 2015
Matteo Salvini, the leader of Italy’s Northern League, gives a speech in the European Parliament in Strasbourg, April 29, 2015 (European Parliament)

Italy’s far-right League is benefiting the most from the government deal it struck with the populist Five Star Movement earlier this month.

  • In municipal elections on Sunday, the League captured the former left-wing strongholds of Massa, Pisa and Siena in the region of Tuscany.
  • Nationally, the League is tied with the Five Star Movement in the polls. Both get 27-29 percent support. In the last election, the Five Stars got 33 percent support against 17 percent for the League. Read more

Italy Joins Trump in Resisting Canadian Trade

Prime Ministers Giuseppe Conte of Italy and Justin Trudeau of Canada meet at the G7 summit in Charlevoix, June 8
Prime Ministers Giuseppe Conte of Italy and Justin Trudeau of Canada meet at the G7 summit in Charlevoix, June 8 (Flickr/Justin Trudeau)

Italy has learned from Donald Trump that Canada is now the enemy of the West.

In an interview with the newspaper La Stampa, the country’s new agriculture minister, Gian Marco Centinaio of the far-right League, said he would ask parliament not to ratify the trade agreement the EU negotiated with Canada in 2016.

Without ratification by all 28 member states, the treaty cannot go into effect for the entire European Union. Read more