Right-wing populism: Meloni is sending Italy’s economy on a ghost ride – Economy

Right-wing populism: Meloni is sending Italy’s economy on a ghost ride – Economy

The sentence has cult status: “Now I deal the cards”. Giorgia Meloni recently manifested her claim to power in a television interview. Specifically, it was about filling positions in the cultural and media sector. But the announcement shows their understanding of government in all policy areas. The post-fascist head of government also deals the cards in the economy – primarily to the base of her voter base: to small business owners, the self-employed, tax evaders. They are courted, financially supported and shielded from competition.

The government’s industrial policy in Rome is therefore heading in completely the wrong direction: at a time of dramatic upheaval, it is committed to preserving Italy’s long-obsolete, inefficient economic structures. The damage from this ghost ride threatens to be immense.

Because the dealer in Rome is giving her attention and government support to the less productive part of the Italian economy. This is at the expense of Italy’s already weak competitiveness, the financial stability of the heavily indebted country and the prospects of the young generation. Italy needs growth, innovation and competition. But above all, the government offers: grandfathering. Their incentives are intended to ensure that small businesses that are unable to renew can continue to thrive. You stare in the rearview mirror instead of looking ahead.

In Germany, many entrepreneurs fear the rise of the AfD and are now taking a stand against right-wing extremists. The Italian economy has had a right-wing populist three-party coalition at the helm for 16 months. As soon as she was in power, she abandoned her most dangerous positions. The proximity to Putin and Trump, the firmly rooted rejection of the EU and the euro, the announcement of naval blockades to ward off migrants – Meloni has taken a U-turn and renounced what she had preached in the opposition. The nationalist made herself popular with her European partners and on the financial markets with her inconsistency.

In the Economic policy there is no sign of pragmatics. The coalition, like all populist governments, offers simple solutions to complex problems. She has made the pursuit of consensus the compass of her politics. The result: economic issues are ignored as much as possible. It would be too unpopular to face reality. Rising national debt and minimal growth with high interest rates would force the government to admit that its promises are untenable. But Italy cannot afford to ignore the problems.

The government strategy seems grotesque in the face of advancing deindustrialization. The decline in car production is approaching a tipping point. An example: The Turin Fiat headquarters Mirafiori is struggling with death. Last week, workers spontaneously went on strike after the Stellantis company, the Fiat heard, announced the cessation of production of the Maserati model Levante and another six weeks of short-time work on the assembly lines of the electric Fiat 500. The reason: Italy’s e-transition came to a standstill in 2023. The government has been keeping buyers in the dark about planned scrapping bonuses for almost a year.

The agony of the steelworks in Taranto, southern Italy, also threatens the industrial substance of a country that is Europe’s second largest manufacturer of industrial goods behind Germany. Entire industries depend on what was once the largest smelter in Europe. The major shareholder Arcelor Mittal withdrew and the last blast furnace is now threatened with being shut down.

Despite all this, the cabinet has not yet dealt with the issue of location attractiveness. The topic of competition is taboo. Research spending fell from 1.5 percent to 1.0 percent in 2023. The EU average is 2.1 percent.

Instead, Rome preferred to respond to the structural problems with the “Made in Italy law”. The government is subsidizing companies with watering cans – from tanning to baking to tree nurseries. As if the country’s economic survival depends on saving its past.

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