Journal of Political Risk, Vol. 11, No. 1, January 2023
Nationalist identarian right-wing party Fratelli d’Italia (“Brothers of Italy”) was the only major Italian party to oppose former European Central Bank President Mario Draghi’s “national unity” coalition government which governed Italy between February 2021 and September 2022. Among the key campaign promises made by Fratelli d’Italia’s leader and current Italian Prime Minister Giorgia Meloni during the electoral campaign of September 2022 was a break with the economic policies of the Draghi government. However, the first Italian female Prime Minister has thus far demonstrated the opposite orientation.
In fact, Meloni’s sphere of decision making on economic policy is severely limited. Italy’s extremely high levels of public debt (above 150% of GDP) coupled with weak trust from financial markets and the European Union’s tight fiscal rules make it very costly (both financially and reputationally) for any Italian government to finance new public policies. Additionally, investments are currently mainly being made through the European Union’s Recovery Instrument, an ad-hoc fund created after the COVID-19 pandemic which lends money for EU approved projects, greatly constraining the power of the Italian government.
The war in Ukraine and the consequent energy crisis are further restricting the scope for economic changes. Together with Germany, Italy is the European country most dependent on Russian gas imports, and the current government (like the previous one) is committing much of its resources towards shielding businesses and families from the price increases. In the Italian 2022/2023 budget law, two-thirds of the financial resources were allocated to fighting these price increases and mitigating the additional economic consequences of the war. These measures were ‘copy-pasted’ from the budget law drafted under the Draghi government.
The remaining third of the 2022/2023 budget law funds were allocated to policies benefiting those groups that supported Meloni and her right-wing coalition government allies. These symbolic policies included an increase in the minimum state pensions of roughly 20 euros per month for people over the age of 75 in 2023, tax breaks for some very restricted categories of self-employed workers, and a 5% VAT reduction on baby products.
These policies too were pushed forward inside the previous government by the two current coalition parties of Meloni, Forza Italia (led by former Italian Prime Minister Silvio Berlusconi) and Lega, which were also part of the coalition government led by Draghi, together with the center-left Partito Democratico and the populist Movimento Cinque Stelle.
Though little has changed on the economic front, something has indeed changed since Meloni’s government took power. The government’s approach towards migrants (especially sub-Saharan Africans) became tougher, public prosecutors and the justice system are facing increased pressure, and anti-abortion groups hope for the government to introduce restrictive measures in the near future. It is no coincidence that the common feature of these changes is that they require no government expenditure.
Both for structural and contingent reasons, Meloni’s government could not overturn the previous Italian government’s economic policies, despite campaigning on a platform of great discontinuity. It is yet to be seen what the Fratelli d’Italia-led coalition government will do once its hands are free from the energy crisis and the Ukrainian war. But thus far, governmental power has rendered far-right nationalist Meloni’s economic policies almost identical to the ones of a former European Central Banker, and there are few reasons to believe this will change in the future.
Lorenzo Ammirati holds a BA in Political Science from the University of Bologna, and an MA in International Relations from SOAS, University of London. He has worked in institutions, public affairs, and political risk consulting. Currently he works alongside an Italian MP.