Last weekend’s setback in the Italian local elections for Prime Minister Matteo Renzi should serve as a stark warning to European policymakers not to be overly complacent about the fallout from a Greek default. The elections reveal that Renzi’s honeymoon with the Italian electorate is over and that populist anti-European forces in Italy are again on the march.
This has to be of considerable concern since the Italian economy, which is the third-largest in the eurozone, remains wracked with an excessively high public debt level. That makes it imperative that Italy perseveres with both budget consolidation and with structural economic reform that might lift the country’s sclerotic economic growth rate in order to help the country dig out from under its public debt mountain.
Among the more disturbing aspects of last weekend’s election was not simply that Renzi’s reform-minded Democratic Party was able to garner only 23 percent of the vote. Rather, it was that the anti-reform and anti-European parties did so well in those elections. The populist Five Star Party led by Beppe Grillo managed to get as much as 19.5 percent of the vote, while the anti-European Italian Northern League increased its share of the vote to 12.5 percent. Renzi’s relatively poor showing at the polls has to raise serious questions about his ability to retain his reform momentum.
Full text of this article can be found at TheHill.com.
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