Econostrum | Economic News in the Mediterranean

Mario Draghi goes to Italy's bedside and promises radical remedies

Written by Frédéric Dubessy on Wednesday, February 17th 2021 à 14:49 | Read 458 times

Mario Draghi presents his program to turn Italy around in front of the Senate (photo: Presidency of the Italian Council)
Mario Draghi presents his program to turn Italy around in front of the Senate (photo: Presidency of the Italian Council)
ITALY. Mario Draghi, who was sworn in on Saturday, February 13, 2021, after being designated by the President of the Italian Republic Sergio Mattarella on Wednesday, February 3, 2021, to form a new government, presented his program on Wednesday, February 17 before the Senate. He will appear before the Chamber of Deputies on Thursday, February 18.

Aged seventy-three, the successor of Giuseppe Conte, who resigned after being dropped by his coalition allies, has set himself two objectives. "The main duty to which we are all called, and I in the first place as President of the Council, is to fight by all means the pandemic and to save the lives of our citizens". He also commits himself to "carry out radical reforms." He does not deprive himself of a historical reference to define the immensity and importance of his role: "Like the governments of the immediate post-war period, we have the responsibility to launch a new reconstruction (...) This is our mission as Italians: to leave a better and fairer country for our children and grandchildren."

The first in Europe to be confronted with Covid-19, Italy has recorded 2.73 million confirmed cases for 94,171 deaths according to the CSSE of Johns Hopkins University. It is the eighth most affected country in the world by the pandemic and the third in Europe and the Mediterranean behind France (3.54 million cases) and Spain (3.09 million) and ahead of Turkey (2.60 million). Its first major decision Sunday evening, February 14, 2021 was also, in view of the deteriorating health situation with the British variant, not to allow the reopening of ski resorts in areas classified in yellow (a dozen regions where the epidemic is least active) scheduled for Monday, February 15, 2021, so a few hours later. A ban extended until March 5, 2021.


A conditional European envelope of 210 bn€

With a GDP in 2020 down 8.9% (and still down 2% at the end of January 2021 compared to December 2020), Italy urgently needs to turn its finances around. Rome is relying heavily on the planned €210 billion windfall from the European Union. But to do so, it will have to present a detailed spending plan to the European Commission in Brussels at the end of April 2021, which will condition the release of aid.
The new Prime Minister has decided to place Daniele Franco, number two at the Bank of Italy, in the post of Minister of the Economy to manage all this.

At the end of 2020, Italy's cumulative debt reached €2,600 billion (158% of GDP). Only Greece (over 200% of GDP according to the IMF) has a higher ratio among the 27 member states. It is one of the highest in the world.

The situation is at its worst for the third economy of the euro zone and the 59.64 million Italians. With the loss of 400,000 jobs in 2020 and an unemployment rate of 9% at the end of January 2021. It has been on the rise since December 2020 after four consecutive months of decline. A decline in trompe l'oeil according to the National Institute of Statistics (Istat) which attributes it to the fact that many Italians were no longer looking for work due to the closure of many companies during the confinement.


Almost total political support from the parties

Mario Draghi enjoys the support of almost all of the major political parties from Luigi di Maio (5 Star Movement - former anti-Systemic) promoted to Minister of Foreign Affairs, to the bubbling Matteo Salvini (far-right League) who brings one of his lieutenants, Giancarlo Giorgetti, into the Labor portfolio. Only one party was missing to achieve unanimity: Giogia Meloni's Italian Brothers (far right). He should therefore have no difficulty in obtaining the confidence of both the Senate (Wednesday evening, February 17) and the Chamber of Deputies (Thursday, February 18).

The former president of the European Central Bank - nicknamed "Super Mario" after having brought the euro to the brink of collapse during the debt crisis in the zone in 2012 - will also have to tackle fundamental projects that have fallen behind, such as reforming the bureaucracy-ridden administration or launching the ecological transition. The priorities are "renewable energies, the fight against air and water pollution, high-speed trains, hydrogen production and distribution, digitization and 5G".


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