Social Europe

politics, economy and employment & labour

  • Themes
    • Strategic autonomy
    • War in Ukraine
    • European digital sphere
    • Recovery and resilience
  • Publications
    • Books
    • Dossiers
    • Occasional Papers
    • Research Essays
    • Brexit Paper Series
  • Podcast
  • Videos
  • Newsletter

Is Italy’s Populist Government Manufacturing The Next Political Crisis?

Valerio Alfonso Bruno and James Downes 23rd October 2018

Valerio A. Bruno

Valerio A. Bruno

Italian politics: the current state of play

In late September, the Italian Parliament approved the DEF (Documento di Economia e Finanza), with a deficit/GDP of 2.4 percent for 2019, considered excessive and dangerous by the EU. It was a critical moment. During recent months, prominent Italian politicians from M5S, the Partito Democratico and Lega had all weighed in on what the budgetary priorities should be.

Possible measures included a flat tax, basic income (reddito di cittadinanza) and a revision of the Legge Fornero of the Mario Monti government (a pension scheme named after a former minister), about which the ECB has already expressed its concern. Comments from some influential politicians in Italy have raised the distinct possibility that the Italian populist government may be forced to exit the eurozone if tensions over spending persist.

James F. Downes

James F. Downes

During the summer, the populist coalition had already discussed its strategic approach. As reported by Bloomberg, Deputy Prime Minister Matteo Salvini has continued the government’s ‘hard’ eurosceptic stance and pointed at the negative, constraining impact of EU rules. Salvini said: ‘If external constraints prevent us from spending to have safe roads and schools, then it really calls into question whether it makes sense to follow these rules. There can be no trade-off between fiscal rules and the safety of Italians.’

‘Strategic fear’

The populist government of M5S and Lega is ideally placed not only to benefit from these upcoming political storms, it may also seek to artificially manufacture such crises for its own political gains, in what resembles a self-fulfilling prophecy. Currently, there are strong tensions within financial markets, particularly with regard to Italian public debt. Similar tensions also befell the Berlusconi-led government in 2011, leading to a political crisis.

Strategically, the governing populist coalition may see Italy’s poor economic conditions as a unique opportunity to use the financial markets as an ‘alibi’ for broken promises (for example on the flat tax, basic income and pension reforms). They may seek to place the blame on (a) EU austerity policies, alongside the (b) the perpetual weakness of mainstream centre-right and left parties. This is because mainstream parties on both left and right are likely to be blamed by the populist coalition government for the poor economy that they have inherited. Thus, they may seek to point the blame at the political establishment, in turn deflecting it from their own doorstep.


Our job is keeping you informed!


Subscribe to our free newsletter and stay up to date with the latest Social Europe content. We will never send you spam and you can unsubscribe anytime.

Sign up here

A similar incident occurred in May, with public debt rising sharply. The President, Sergio Mattarella, took his time after the 2018 Italian election to respond to the proposed M5S-Lega nominees for cabinet positions. Mattarella eventually rejected the nominee for the economy ministry (Paolo Savona).

Both Italian deputy prime ministers, Luigi Di Maio (of M5S) and Salvini (of Lega) accused the financial markets and rating agencies of being behind Mattarella’s decision. They also alluded to the EU interfering with Italian politics and undermining Italian sovereignty. This, along with the decision to nominate a technocratic government under Carlo Cottarelli (a former Director of the International Monetary Fund), fueled M5S-Lega conspiracy claims.

Why the EU’s containment strategy may be doomed to fail

The EU must tread carefully in dealing with the populist Italian coalition government. Critically, technocratic institutions (from the European Commission to credit rating agencies) should not provide more ammunition for them. Arguably, this has already happened recently.

It would be extremely counter-productive to evoke the risk of a ‘Troika’ or even to usher in another technocratic government by actively interfering in the process. The case of the Monti administration springs to mind, further underlining the problems caused by unelected ‘technocrats’ in power, and how this can undermine the inner workings of liberal democracy – and, most importantly, alienate the Italian people.

Some recent political commentary argues that populist governments such as Italy’s are likely to represent a short-term phenomenon. However, we argue that the so-called EU containment strategy may instead serve to intensify and increase support for populist governments such as the M5S-Lega coalition.

It is also understood by many leading academic experts that: ‘Populism is usually better as an electioneering tool than as a guide for government policy. Populism is therefore bound to stay as a vocal opposition force. But if populist leaders are elected as presidents or coalition partners, they are likely to discredit themselves in office, at least in democracies.’ However, this may not be the case with the current Italian government and it may be much more resilient in governing Italy than conventional wisdom would have us believe.

The renowned expert on populism, Professor Cas Mudde, has also outlined how the Italian populist government has been misunderstood by several commentators, particularly in regard to the divergent ideology of both M5S and Lega. M5S can be considered a ‘centrist’ populist party that has a ‘catch-all’ political ideology, which includes anti-corruption measures alongside an emphasis on environmental policies. In contrast, Lega represents a ‘classic’ populist radical right ideology, with a focus on anti-immigrant positions.

A 21st-century populist governing strategy?

A ‘credible’ populist strategy by the current Italian government could involve further manufacturing a political crisis through a variety of routes. The coalition could (a) produce more public debt to achieve its costly promises, alongside (b) further adopting ‘hard’ Eurosceptic rhetoric. This strategy would further blame the EU and its institutions for the current economic malaise in Italy.


We need your support


Social Europe is an independent publisher and we believe in freely available content. For this model to be sustainable, however, we depend on the solidarity of our readers. Become a Social Europe member for less than 5 Euro per month and help us produce more articles, podcasts and videos. Thank you very much for your support!

Become a Social Europe Member

The ongoing refugee crisis has also provided a distinct opportunity for the populist government to achieve political capital in the minds of Italian voters. The populist government still riding high in the polls and performing considerably better than traditional left and right-wing parties. The populist coalition government also has a number of cards up its sleeves, including continuing to attack the ‘mainstream’ parties for getting them into the current economic mess that the populist coalition government has inherited. This would be a ‘classic’ populist playbook strategy in further outlining how M5S-Lega represents the ‘pure people’ against a ‘corrupt and outdated political elite’ in Italian politics. Paradoxically, the Italian populist government may seek to consolidate its power further by manufacturing the next political crisis.

Therefore, the financial chaos that weakened Italy in 2011 looks like it may be repeated, given the volatility of the current political and economic situation. It is likely to become even more volatile in the weeks ahead with the unpredictability of the populist governing coalition. Italian politics currently stands on the edge of a precipice.

Valerio Alfonso Bruno and James Downes

Valerio Alfonso Bruno holds a Ph.D. in “Institutions and Policies” from the Università Cattolica del Sacro Cuore of Milan (2017) and was doctoral researcher at the University of Fribourg, Switzerland (2015). James F. Downes is a Lecturer in Comparative Politics in the Department of Government and Public Administration at the Chinese University of Hong Kong. He is an Affiliated Visiting Research Fellow (Honorary) at the Europe Asia Policy Centre for Comparative Research. He is also a Data Advisor for the Local Democracy Dashboard project, based at the London School of Economics.

You are here: Home / Politics / Is Italy’s Populist Government Manufacturing The Next Political Crisis?

Most Popular Posts

European civil war,iron curtain,NATO,Ukraine,Gorbachev The new European civil warGuido Montani
Visentini,ITUC,Qatar,Fight Impunity,50,000 Visentini, ‘Fight Impunity’, the ITUC and QatarFrank Hoffer
Russian soldiers' mothers,war,Ukraine The Ukraine war and Russian soldiers’ mothersJennifer Mathers and Natasha Danilova
IGU,documents,International Gas Union,lobby,lobbying,sustainable finance taxonomy,green gas,EU,COP ‘Gaslighting’ Europe on fossil fuelsFaye Holder
Schengen,Fortress Europe,Romania,Bulgaria Romania and Bulgaria stuck in EU’s second tierMagdalena Ulceluse

Most Recent Posts

geopolitical,Europe Options for Europe’s ‘geopolitical’ futureJon Bloomfield
democracy,democratic Reviving democracy in a fragmented EuropeSusanne Wixforth and Kaoutar Haddouti
EU social agenda,social investment,social protection EU social agenda beyond 2024—no time to wasteFrank Vandenbroucke
pension reform,Germany,Lindner Pension reform in Germany—a market solution?Fabian Mushövel and Nicholas Barr
European civil war,iron curtain,NATO,Ukraine,Gorbachev The new European civil warGuido Montani

Other Social Europe Publications

front cover scaled Towards a social-democratic century?
Cover e1655225066994 National recovery and resilience plans
Untitled design The transatlantic relationship
Women Corona e1631700896969 500 Women and the coronavirus crisis
sere12 1 RE No. 12: Why No Economic Democracy in Sweden?

Eurofound advertisement

Eurofound webinar: Making telework work for everyone

Since 2020 more European workers and managers have enjoyed greater flexibility and autonomy in work and are reporting their preference for hybrid working. Also driven by technological developments and structural changes in employment, organisations are now integrating telework more permanently into their workplace.

To reflect on these shifts, on 6 December Eurofound researchers Oscar Vargas and John Hurley explored the challenges and opportunities of the surge in telework, as well as the overall growth of telework and teleworkable jobs in the EU and what this means for workers, managers, companies and policymakers.


WATCH THE WEBINAR HERE

Foundation for European Progressive Studies Advertisement

Discover the new FEPS Progressive Yearbook and what 2023 has in store for us!

The Progressive Yearbook focuses on transversal European issues that have left a mark on 2022, delivering insightful future-oriented analysis for the new year. It counts on renowned authors' contributions, including academics, politicians and analysts. This fourth edition is published in a time of war and, therefore, it mostly looks at the conflict itself, the actors involved and the implications for Europe.


DOWNLOAD HERE

Hans Böckler Stiftung Advertisement

The macroeconomic effects of re-applying the EU fiscal rules

Against the background of the European Commission's reform plans for the Stability and Growth Pact (SGP), this policy brief uses the macroeconometric multi-country model NiGEM to simulate the macroeconomic implications of the most relevant reform options from 2024 onwards. Next to a return to the existing and unreformed rules, the most prominent options include an expenditure rule linked to a debt anchor.

Our results for the euro area and its four biggest economies—France, Italy, Germany and Spain—indicate that returning to the rules of the SGP would lead to severe cuts in public spending, particularly if the SGP rules were interpreted as in the past. A more flexible interpretation would only somewhat ease the fiscal-adjustment burden. An expenditure rule along the lines of the European Fiscal Board would, however, not necessarily alleviate that burden in and of itself.

Our simulations show great care must be taken to specify the expenditure rule, such that fiscal consolidation is achieved in a growth-friendly way. Raising the debt ceiling to 90 per cent of gross domestic product and applying less demanding fiscal adjustments, as proposed by the IMK, would go a long way.


DOWNLOAD HERE

ILO advertisement

Global Wage Report 2022-23: The impact of inflation and COVID-19 on wages and purchasing power

The International Labour Organization's Global Wage Report is a key reference on wages and wage inequality for the academic community and policy-makers around the world.

This eighth edition of the report, The Impact of inflation and COVID-19 on wages and purchasing power, examines the evolution of real wages, giving a unique picture of wage trends globally and by region. The report includes evidence on how wages have evolved through the COVID-19 crisis as well as how the current inflationary context is biting into real wage growth in most regions of the world. The report shows that for the first time in the 21st century real wage growth has fallen to negative values while, at the same time, the gap between real productivity growth and real wage growth continues to widen.

The report analysis the evolution of the real total wage bill from 2019 to 2022 to show how its different components—employment, nominal wages and inflation—have changed during the COVID-19 crisis and, more recently, during the cost-of-living crisis. The decomposition of the total wage bill, and its evolution, is shown for all wage employees and distinguishes between women and men. The report also looks at changes in wage inequality and the gender pay gap to reveal how COVID-19 may have contributed to increasing income inequality in different regions of the world. Together, the empirical evidence in the report becomes the backbone of a policy discussion that could play a key role in a human-centred recovery from the different ongoing crises.


DOWNLOAD HERE

ETUI advertisement

Social policy in the European Union: state of play 2022

Since 2000, the annual Bilan social volume has been analysing the state of play of social policy in the European Union during the preceding year, the better to forecast developments in the new one. Co-produced by the European Social Observatory (OSE) and the European Trade Union Institute (ETUI), the new edition is no exception. In the context of multiple crises, the authors find that social policies gained in ambition in 2022. At the same time, the new EU economic framework, expected for 2023, should be made compatible with achieving the EU’s social and ‘green’ objectives. Finally, they raise the question whether the EU Social Imbalances Procedure and Open Strategic Autonomy paradigm could provide windows of opportunity to sustain the EU’s social ambition in the long run.


DOWNLOAD HERE

About Social Europe

Our Mission

Article Submission

Membership

Advertisements

Legal Disclosure

Privacy Policy

Copyright

Social Europe ISSN 2628-7641

Social Europe Archives

Search Social Europe

Themes Archive

Politics Archive

Economy Archive

Society Archive

Ecology Archive

Follow us

RSS Feed

Follow us on Facebook

Follow us on Twitter

Follow us on LinkedIn

Follow us on YouTube