Despite his youthful determination and sense of fresh thinking in a jaded Italian political scene, Italy’s Prime Minister designate Matteo Renzi is heading for a bruising battle with European Union (EU) authorities, who have warned that Brussels will not bend tough EU budget rules despite Renzi’s promises of a sweeping four-month reform programme aimed at reviving Italy’s moribund economy. The EU fears that Renzi will breach the long-established EU deficit limit of 3 per cent of economic output which was established by the Maastricht Treaty and has become a touchstone of European financial orthodoxy. As Olli Rehn of the EU Commission said: “Italy has a very high level of public debt. Piling new debt on top of old debt does not seem to improve the economic competitiveness of Italy.” This dry position is in direct contrast to Renzi’s ideas expressed in a recent comment on his website, where he said, “Going beyond austerity as religion and the accounts as the objective is the first step to build a political Europe that is able to choose rather than just administering.”
Renzi’s economic agenda is based on his frustration with the previous coalition’s slow pace of reforms to Italy’s stagnant economy. Instead, Renzi has promised radical reforms to the electoral and constitutional system, to the labour market and to the public administration and tax systems within the first four months of taking office.
