A recipe for reviving European growth …

In a recent FT article (intermittent paywall), that Luigi Di Maio, Italy’s Five Star party, deputy prime minister, states that,

Rome’s controversial spending plans will become “a recipe” for reviving European growth and that the continent is ready to abandon austerity and embrace the deficit-busting approach of US president Donald Trump.

Current US growth at around 4% is unheard of in the Eurozone and so he – not unreasonably – concludes that electoral support for austerity is unlikely to continue (if indeed, we might wonder, it was actually ever there).

Italy’s budget submitted to the European commission has of course included extra ‘social’ expenditure and Di Maio is convinced Italy can “strengthen the European Union and the eurozone to do good from the point of view of social rights”. Di Maio is now aged just 32, and was once a steward at Napoli football club and so well acquainted with the areas 60% youth unemployment. He goes on, “Between 2007 and 2013, we were totally ignored as a political reality ….[and Italians’ social] “rights were sacrificed on the altar of debt, but while they were sacrificed the debt grew.” He continues, “If today we have 6m poor Italians in Italy, this is causing a social tension that also creates tensions with foreigners. This is inevitable.” He considers that austerity policies were pursued by a section of the European political class which certain individual countries have repeatedly broken. (Before Macron’s arrival France was a regular).

All this is, in my opinion, spot on. Even more so if he had added that the 3% limit on the budget deficit was purely arbitrary and not based on economics at all, though it was based on religion, which, all too ironically, it has actually become. It was originally a French idea based on the Catholic Trinity, with which it was felt the French at the time would be familiar, designed to give support to President Mitterand, who felt he needed a way to refuse ministers who kept asking for more.

In order to progress these ideas Five Star are hoping to establish a new anti-austerity grouping in the EU Parliament for the next elections – interestingly not together with their League coalition partners – although he does suggest that they still intend to be in their Italian coalition for the full term. He concludes “Our new group will keep at its centre expansive policies for work, income, welfare, and the environment. These are the principles on which we want to create the new Europe.

These ideas are progressive and hopeful. Yet, although he does not mention it, I suspect he still needs a plan B in case the election doesn’t go as anticipated – and the European Commission return to him, full of excessive, Catholic, 3% fervour.

That fortunately, is a group of Milanese Italians promoting ‘Fiscal Money’, so there is, in fact, one of those too and I just hope that by not talking about it, it doesn’t mean he won’t use it, because I fear he may need to.

Comments

  1. Geoff -

    I admit to being somewhat confused by this post Peter. Matteo Salvini who is the joint Deputy Prime Minister of Italy with Luigi Di Maio as recently as October was involved in a joint conference with Marine Le Penn where he labelled both Juncker and Moscovici as the enemies of Europe. The coalition with Five Star is openly far right. It advocates the break up of the EU and is already implementing racist policies. An example of this is in Lodi where free school meals and transport are now denied to non-EU citizens even if they were born in Italy. It’s implementation coinciding with the 80’s anniversary of the former fascist anti-Semetic laws discriminating against Jews. The actions of the Italian government are being hailed by the far right throughout the world including Trump and white supremacists. Farage is quoted as saying “….Salvini is the future….” Surely Italy is becoming a global source of inspiration for fascism and extremists and nothing good can come from that.

    1. Peter May -

      It is confusing to me too. But 5 star seem to have a lot of good ideas. The problems seem to arise from the fact that the League are in charge of what we would call the Home Office. 5 star are in coalition and that’s why I mentioned that they’re not fighting the Euro elections together!
      In the end if 5 star run a budget deficit that extra spending will help to take some of the presure off services/schools needed as a result of high immigration, particularly with Italy’s high unemployment.

  2. Geoff -

    I suppose my gut feeling, and I think history bears witness to this, is they are playing the anti-austerity and anti-immigration cards to win the popular vote. Hitler did this and I think Trump is too. Their ultimate aim is for an Italian Brexit and the the resulting power it will bring them as modern fascists. The ruling class always favor fascism over Socialism because they are not targeted unless they oppose the political class or are Jews or a another targeted minority group. I think the Italian coalition government are playing politics and we need to be cognisant of that fact.

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