Meloni’s tenure beset by economic woes, domestic problems

Italian Prime Minister Giorgia Meloni, marking her first year in power, faces significant challenges, including weak economic growth and high interest on the country’s substantial debt. Her coalition, the first led by a woman in Italy’s history, was formed a year ago following a decisive election victory, but economic concerns and personal issues have marked her tenure.

While Meloni’s government was initially perceived as one of the most right-wing in Italy since World War II due to her party’s historical ties to post-fascist groups, she worked to quell foreign concerns of extremism by adopting a strongly pro-Western, EU-friendly stance. She also pledged unwavering support for Ukraine in its conflict with Russia and implemented policies aimed at pleasing her rightist voter base, focusing on defending traditional family values, safeguarding Italy’s cultural heritage, and addressing migrant arrivals.

However, Italy’s economic rebound from the COVID-19 pandemic has stalled, with GDP contracting by 0.4% in the second quarter, and the country is expected to have one of the lowest growth rates in the eurozone next year. This makes it challenging for Meloni to deliver on her promises of tax cuts and leaves Italy’s high debt, equivalent to 140% of national output, vulnerable to market turbulence.

Meloni also faces personal challenges, having announced her separation from her long-time partner due to his controversial and sexist comments, which have sparked outrage.

Despite these difficulties, Meloni’s government approved a 2024 budget with tax cuts and increased spending. However, this has not reassured investors and has contributed to rising Italian bond spreads, with yields on Italian 10-year bonds significantly higher than those of other eurozone countries.

Effective implementation of investment plans financed through EU post-COVID funds is crucial for Italy’s economic recovery and debt reduction, but Rome has faced challenges meeting Brussels’ policy conditions and spending the allocated funds effectively.

On the international front, Meloni has supported Ukraine and maintained a relatively cooperative relationship with Brussels, despite her eurosceptic past. She has also dropped calls for a naval blockade to prevent migrants from North Africa, despite ongoing challenges with migrant arrivals on Italy’s coasts.

In domestic politics, Meloni has managed to avoid the political chaos that plagued her predecessors, thanks in part to a divided opposition. Her party maintains a commanding position in the polls, with around 30% of voter support, while her coalition partners, the League and Forza Italia, lag behind. Analysts believe her ability to retain centre-right voters who switched to her party from other factions will help her maintain her grip on power.

Despite these challenges, Meloni has navigated her first year in office, and the stability she brings is a contrast to the political turbulence that preceded her tenure.