FleishmanHillard roundtable: “Italian elections: national dynamics and European perspectives” – Key conclusions

On 21 February 2018, FleishmanHillard Brussels hosted a roundtable on the upcoming general elections in Italy, with an open discussion on the current situation and any potential repercussions that the outcome might have on the political and economic stability of Italy and of the European Union.

Our three guest speakers focused on the current political scenario, the country’s economic forecasts and the people’s sentiments and attitudes. There was general agreement that the political debate in Italy has suffered over the last decades, due to increasing disaffection towards politics and distrust towards Italian politicians and towards Europe.

Another European Grand Coalition alongside rising Euroscepticism?

Beda Romano (Il Sole 24 Ore) highlighted that two potential coalition scenarios are expected: a grand coalition between centre-right and centre-left, and a centre-right coalition. The former is the option that Brussels, Berlin and Paris would welcome as it would ensure more stability and reduce risk of political extremism within the coalitions, especially from anti-establishment groups such as the 5 Star Movement and the Lega. He underlined how 30% of Italians are still undecided in terms of their voting intentions, and further noted that more than 50% of the population does not trust Europe or see that being part of the European Union has brought value to the country. Mr. Romano also described how, over the last 50 years, Italy has shifted from a convinced founder of the European “project” to one of the Member States with the highest Euroscepticism rates, connecting the latter mainly to the country’s inability to adapt to the monetary union and to the perceived ‘threat’ coming from Brussels’ demands on reforms, system modernization and the abolition of ‘guilds’. Additional scepticism seems to relate to the recent immigration crisis, where Italians have perceived the lack of support from both the EU and neighbouring countries.

Greater economic stability than expected……

Daniel Gros (CEPS) focused his intervention on what the potential economic implications of the elections might be, predicting no major changes in Italy’s economy no matter the result of the elections.  The lack of significant foreign debt and the absence of large deficits in the past can be seen as positive protections, with additional backing against a major financial crisis coming from the bulk of private savings being in national banks. Despite Italy’s resistance to reforms, when looking at the future he observed that a reduction in investments to ensure returns, combined with the safeguarding of savings would benefit the country and protect it from significant future financial shocks.

…..and greater political instability.  

John Wyles (former FT correspondent in Rome) was less optimistic about Italy’s future, highlighting the deep changes that have taken place over the last decades with regard to voting trends, political configuration and even parties’ names. There exists a general sensation of ‘victimhood’ among citizens, which has spread since the introduction of the Euro, when the population experienced an overnight decrease in the living standards and ultimately felt ‘robbed’. Looking at the current economic situation, Mr. Wyles observed that Italians have become increasingly hostile towards fiscal policies and austerity measures, perceiving them as dictated by Germany, while strong disdain for the state remains an issue. He concluded by noting that Italians and British have something in common: they do not understand how Europe works.

Impossible promises?

All speakers agreed that most of the promises made during the political campaign do not take into account national economics as they would very likely result in Italy’s breaking the Stability Pact rules.  Other participants pointed out that the national media are not commenting on the lack of realism of most the electoral promises, and are not questioning the accountability and credibility of political leaders.

In short, the political situation in Italy continues to be characterised by uncertainty and unpredictability. Euroscepticism is more present than ever and these elections will be seen as important for the future of Italy and Europe, also taking into account that, once the United Kingdom is formally out of the European Union, Italy will become the 3^rd largest economy in the EU – there was scepticism from the speakers that Italy would be able to act at the EU level commensurate to its size and importance.