If Meloni wants to achieve anything while in office, she will first need to tone down the reactionary rhetoric that has characterized her campaign. Her Brothers of Italy party is rooted in postwar neo-fascism, a legacy that Meloni has sometimes embroidered with her own brand of Euroscepticism. Her campaign included attacks on immigrants and what she called the “LGBT lobby.” She has at times echoed the xenophobic language of Hungarian Prime Minister Viktor Orban. No wonder the outside world had some doubts about her eligibility. You will need to decide if she wants to provoke or judge.
The new government won’t take office until late October, but with the economy expected to grow just 0.4% this year, Meloni doesn’t have much time to waste. Italy’s public debt now accounts for more than 150% of GDP. GDP per capita has not grown since 2000, and nearly a quarter of the country’s youth are unemployed and not in school. Higher interest rates pushed 10-year bond yields to 4.3%, compared to less than 1% last year.
Reassuring investors that Italy can still manage its massive commitments should be Meloni’s top priority. Choosing a competent economic minister would be a wise first step. Then, her government should set a small number of clear goals when formulating its first budget. Simplifying the country’s complex tax system, something Meloney championed during the election campaign, would go a long way toward improving compliance and investment. Strengthening the faltering public education system – plagued by excessive bureaucracy, rigidity in hiring and centralization – would help lay the foundation for growth.
Meloni will also need to weed out the corporate policies and protectionism she aired during the election campaign, which will only exacerbate Italy’s chronic productivity shortage. To some extent, she would have no choice: about $200 billion in loans and grants from the European Union’s pandemic recovery funds, which Italy desperately needs, was contingent on a fiscal framework and a set of reforms approved by Meloni’s predecessor, Mario Draghi. . Any sign of Italy backtracking would also make it ineligible for the new bond-buying instrument approved by the European Central Bank in July. Meloni should help that the coalition partner Matteo Salvini’s League had a disastrous election, taking less than 9%. This would make it easier for her to resist his unsustainable campaign promises.
Besides fiscal support, Meloni will have no shortage of challenges. Most importantly, Italy needs to continue working with its European and NATO allies to counter Russian aggression in Ukraine, even as the energy costs associated with sanctions rise this winter. Meloni wisely resisted calls for more deficit spending to protect Italians from these costs. But it will have to find a better way to finance the already announced support; Draghi’s unexpected tax on energy companies has produced far less revenue than expected and faces legal challenges. In the long term, Italy needs to reduce its heavy dependence on Russian gas and stick to its energy transition goals.
Meloni’s rise was amazing. But she must remember that what puts Italian politicians in power rarely keeps them there for long. The faster the new government moves beyond inflammatory rhetoric and focuses on delivering stable and growth government, the better its chances of staying relevant — and in office.
More from Bloomberg Opinion:
• Italy’s right wing scares less UK markets: Lionel Laurent
Melony can have more influence in the EU than at home: Rachel Sanderson
Feminist or not, Giorgia Meloni has a duty to women: Maria Tadeo
The editors are members of the Bloomberg Opinion editorial board.
More stories like this are available at bloomberg.com/opinion
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