Italian centre-left leader Matteo Renzi is one step away from forming a new government after he swiftly eliminated party rival Enrico Letta as prime minister. New numbers showing how slowly the economy is growing highlight the huge challenge ahead.
After Renzi and the rest of the centre-left Democratic Party (PD) leadership forced Letta’s hand by withdrawing their support at a special meeting on Thursday, the prime minister handed his resignation to President Giorgio Napolitano.
Napolitano will hold two days of consultations leading to the appointment of a successor.
The 39-year-old Renzi, whose PD is the biggest party in Parliament, could be named premier as soon as this weekend.
Renzi, who would be Italy’s youngest-ever prime minister and the third in succession to be appointed without winning an election, faces intense pressure to achieve the structural reforms that have eluded Italy for years.
Though he has long been agitating for sweeping change in Italian politics and won a landslide victory for his party’s leadership in December, few had expected him to snatch power from Letta so soon.
Renzi’s decision to bring down the prime minister matured over the past fortnight, according to people close to him, after mounting pressure from Italy’s business lobby which has criticised the Letta government for not doing enough to help the country’s struggling corporate landscape.
“The change came after a rather abnormal piece of pyrotechnics but I wouldn’t waste too much time on the whys and hows of it all. The problem is this: can he help get the country moving again?” Carlo De Benedetti, one of Italy’s most prominent businessmen, said at an event in Turin.
“If he can, the way the change happened will be forgotten. If he can’t, that is all that will be remembered,” he said.
Economic data yesterday underlined the scale of the challenge Renzi faces in using his decisive, and at times ruthless, political tactics to tackle the deep structural problems that have made Italy one of the world’s slowest growing economies over the past two decades.
Statistics office ISTAT reported that the economy eked out growth of 0.1 per cent in the final quarter of last year, the first rise in Italian gross domestic product since mid-2011.
The meagre scale of the increase underlines how far Italy has fallen behind other European economies including France or Spain, let alone the continent’s champion, Germany.
Italian GDP was still down 0.8 per cent from the fourth quarter a year earlier, and over the whole of 2013 it contracted by 1.9 per cent after a 2.6 per cent drop the year before.
Friday’s numbers, which show how slowly Italy is emerging from its deepest recession since World War Two, are a reflection of a deeply-rooted decline. Italy is still the third largest of the eurozone’s 18 economies, but it is now smaller than it was a decade ago.
Over the past five years, its industrial output has fallen by 25 per cent and in the southern half of the country less than half of the working age population has a job.
It has a €2 trillion euro public debt and 12.7 per cent unemployment, a level not seen since the 1970s.