Giorgia Meloni needs to be bold. Sadly, she appears reluctant
Save time by listening to our audio articles as you multitaskHowever, optimism runs only so deep. Italy’s long-term performance remains lamentable. Its near-zero growth inclub of rich countries, and it is forecast to be in recession in 2023. This record, along with its huge public-sector debt, makes Italy potentially the single currency’s most vulnerable member.
The most important task is to do more to promote competition and so to enhance productivity. Mr Draghi’s government made a start. But Ms Meloni must do a lot more, first to implement his legislative changes and next to overcome the entrenched vested interests that always resist pro-growth reforms in Italy. Rigid labour markets need further liberalisation to reduce youth unemployment and raise female participation in the workforce. Protected service providers should be opened to more competition.
Another problem that much of Europe also shares is a growing inter-generational divide. Italy’s population is ageing and shrinking and othercountries are destined to follow. One malign consequence is the rising political clout of the old. After a partial reversal of earlier pension reforms, Italy spends almost five times as much on pensions as on educating the young. Its labour market favours the old on permanent contracts over the young on temporary ones.
A final problem is rising regional inequality. Much of Europe worries about a gap between successful metropolises and smaller towns and regions that, stands out because of its size and because over the past two decades it has been falling further back. From education to employment and from the shadow economy to corruption and organised crime, thesuffers from greater failings than the rest of Italy.
Italy can oversee positive change, as can the euro area as a whole. Many small manufacturing firms in its north are thriving exporters, just as there are many successful exporters in Germany, France or the Netherlands. Like much of the rest of Europe, Italy is strong in food, fashion, design, culture and tourism, all candidates to be among the growth industries of tomorrow. But excessive regulation, the protection of incumbents and barriers to competition hold back growth and productivity.
France Dernières Nouvelles, France Actualités
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