Insight
What Italy’s Presidential election means for Europe by Luigi Scazzieri, 18 January 2022
The election of a new Italian president could threaten the survival of Mario Draghi’s government of national unity, and will mark the beginning of the 2023 general election campaign. The future of European economic integration hinges in no small part on Italy’s political and economic trajectory. Since Mario Draghi’s government of national unity took office last February, an uneasy truce has prevailed between Italy’s largest political parties, and the country began a process of broadranging reform linked to the EU’s recovery fund. But the election of a new head of state next week could threaten Draghi’s coalition and sap Italy’s reform momentum. And whoever is elected president will have substantial influence: Italian presidents play an important role in government formation and have the power to ask Parliament to reconsider legislation. Draghi brought Italy political stability at a crucial time. His government was backed by the centre-left Democratic Party, the populist Five Star Movement, the right-wing populist League and the conservative Forza Italia. Of the country’s major political forces, only Brothers of Italy, a party with roots in Italy’s postwar neo-fascist movement, remained outside the government. During Draghi’s tenure as prime minister, Italy’s economy has performed quite strongly, with the European Commission predicting economic growth of 6.2 per cent in 2021. As a highly respected international figure, Draghi boosted Italy’s diplomatic clout in Europe – thanks in part to the country’s presidency of the G20 and its co-chairing of the recent climate conference COP-26. Draghi also put Italy’s foreign policy on a more Atlanticist trajectory, dispelling doubts triggered by Rome joining China’s Belt and Road initiative in 2019. Under Draghi, Italy put together the biggest recovery plan in the EU, with around €190 billion from the EU’s recovery fund – €68.9 billion in grants and €122.6 billion in loans – due to be spent between 2021 and 2026. The plan aims to foster economic recovery from COVID-19, the green transition, innovation and digital growth, and to boost Italy’s economic potential though reforms and investment. That is not purely an Italian matter: Italy’s public debt stood at over 150 per cent of GDP at the end of last year. Ensuring that this debt remains sustainable through stronger economic growth is critical for the eurozone’s stability.
CER INSIGHT: What Italy’s Presidential election means for Europe 18 January 2022
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