Italian centre-left leader Matteo Renzi received a mandate yesterday to form a new government, promising rapid tax, labour and institutional reforms to revive a deeply troubled economy.
He needs to seal a formal coalition deal with the small centre-right NCD party to secure a majority and name his Cabinet, but will probably seek a vote of confidence in Parliament later this week.
Renzi, who engineered the removal of a party rival from the premiership last week, plans a radical programme to lift Italy out of its most serious economic slump since World War II. However, he will have to deal with the same unwieldy coalition which he criticised for failing to pass major reforms under its previous leader.
“In this difficult situation, I will bring all the energy and commitment I am capable of,” he told reporters after President Giorgio Napolitano gave him the mandate to form the next government.
“The sense of urgency is extraordinarily delicate and important but it’s also true that, given the time horizon we have set of a full parliamentary term, we’ll need a few days before formally accepting the mandate,” he said.
The 39-year-old Renzi had been expected to take over since his rival Enrico Letta was ousted as prime minister at a meeting of their Democratic Party (PD) last week, following growing impatience with the slow pace of economic reforms.
Renzi received the endorsement of former British Prime Minister Tony Blair, the foreign politician with whom he is most often compared, who said he had the “dynamism, creativity and toughness to succeed”.
In this difficult situation, I will bring all the energy and commitment I am capable of
However, credit ratings agency Fitch underlined the scale of the challenge, maintaining its negative outlook on Italy and highlighting the risk of more political instability.
The eurozone’s third-largest economy is technically no longer in recession since it scraped back into growth in the fourth quarter of 2013. However, it remains profoundly marked by the crisis with a €2 trillion public debt, a crumbling industrial base and millions out of work.
Renzi has promised swift action to create jobs, reduce taxes and cut back the stifling bureaucracy weighing on employers and business, but has offered few specific policy proposals and a promised “Jobs Act” expected last month has been delayed.
He said he expected to lay out full reforms to Italy’s electoral law and political institutions by the end of February, to be followed by labour reforms in March, an overhaul of the public administration in April and a tax reform in May.
With the formal steps leading to the formation of a new government under way, attention has focused on Renzi’s likely choice as economy minister, a position vital to reassuring Italy’s international partners.
Speculation has concentrated on Lucrezia Reichlin, a professor at the London School of Economics who is also in the running to become deputy governor of the Bank of England.
If confirmed, her appointment would continue a series of technocrat finance ministers following Bank of Italy official Fabrizio Saccomanni, the incumbent, and his predecessor Vittorio Grilli, a senior official from the Treasury.