Italy’s Five Star Movement and the Lega party managed to form a coalition government June 1, after months of talks following parliamentary elections in early March.
The government, led by Prime Minister Giuseppe Conte, is the first “populist” government to lead a major European Union (EU) country.
Italy, the fourth-largest economy in Europe, is only now slowly recovering from its worst recession since World War II, and the Italian economy remains smaller than it was prior to the 2008 financial crisis.
Unemployment remains a consistent problem. Italy’s jobless rate is 11.2 percent, and youth unemployment is a staggering 33.1 percent.
Italian banks retain high levels of bad debt, leading to worries—albeit somewhat lessened recently—of a looming Italian banking crisis.
Public discontent with the economy and concerns over the euro are palpable. While a majority of Italians continue to support staying in the eurozone, support for the euro is lower here than in Austria, France, Ireland, Germany, Greece, the Netherlands, or Spain.
Italian debt was a staggeringly high 131.8 percent of the gross domestic product in 2017, and EU officials have already warned that the government’s spending plans, if carried out, would conflict with eurozone budget rules.
The government’s fiscal priorities will better come into focus when its budget is released in October.
While Lega, with a political base in the industrialized north, tends toward more free-market economic policies, Five Star with its base in the lesser-developed south favors greater government intervention in the economy.
Five Star has supported policies such as increased welfare payments, and it has campaigned on a promise to create a universal basic income of at least €780 (about $910) a month for people over 18 who are out of work and have an income below the poverty line, a proposal that is estimated would cost Italy tens of billions of euros every year if enacted.
Five Star and Lega have risen swiftly in popularity, winning more than 50 percent of the vote in the March 4 election when their totals are combined. A 2018 Eurobarometer poll found immigration, unemployment, and economic concerns to be the top three most important issues for Italian citizens.
A belief that the previous government failed to address those issues led to an anti-establishment sentiment within the Italian electorate that manifested itself in the electoral results.
While Italy’s economic woes are important to understanding this anti-establishment mood, the ongoing migrant crisis remains the single-most important issue in the country. Like most of the rest of Europe, Italy has been heavily affected by the ongoing migrant crisis.
The relative closure of the Balkan route (a route from Turkey to Greece, and northwards through Macedonia and the western Balkans to Austria and Germany) and a security vacuum in Libya have combined to result in tens of thousands of migrants, many from sub-Saharan Africa, voyaging across the Mediterranean and landing on Italian soil.
Since 2011, 750,000 migrants have arrived in Italy, a country of 60 million—roughly the same population as California and Florida combined.
Both Five Star and Lega campaigned on platforms that promised to address the migrant crisis and its effects on Italian society.
Italy’s recent refusal to allow a ship carrying 629 migrants to dock is indicative of a desire from Rome to send a message on the issue and showcased the power of Interior Minister Matteo Salvini, the leader of Lega.
Addressing the fallout of the migrant crisis will likely dominate discussions at the EU summit on Sunday, as a YouGov poll found that people in Denmark, Finland, France, Germany, Greece, Lithuania, Poland, Sweden, and the United Kingdom all see immigration and terrorism as the top two issues facing the EU.
The political impact of the migrant crisis is wide, affecting recent elections in Slovenia and currently embroiling German Chancellor Angela Merkel in a potentially fatal political struggle with her Bavarian political allies.
In Italy, the continued arrival of migrants—even while attempting to assimilate the hundreds of thousands who have arrived already—will have major consequences.
Rome will need to address public concerns over migration while also tackling systemic unemployment, a perilous banking sector, and high public spending.
One thing is for certain, however: Solutions for addressing those challenges are sure to have repercussions far beyond Italian shores.
