Within the EU, Italy is often the source of headaches: fiscally unreliable, politically unstable, and in perpetual economic stagnation. Yet in the aftermath of a pandemic that has taken a significant economic toll virtually everywhere, forecasters expect the country’s GDP to grow by 4.5 percent in 2021 and by almost the same amount in 2022. Within the G-7, Italy’s expected performance is second only to that of the United Kingdom. Such an optimistic economic forecast would probably not have been possible without the 191 billion euros (between loans and grants) that Italy received to address the COVID-19 crisis—part of the largest stimulus package ever put in place in the eurozone.
Fortune may favor the brave, but the European Union favors a capable technocrat. Had anyone but Italian Prime Minister Mario Draghi, the former president of the European Central Bank, approached the European Commission with a recovery plan as ambitious as Italy’s, most likely the idea would have been dismissed as a joke. Germany and other countries presented more traditional investment proposals meant to directly address the consequences of the pandemic. Italy’s leadership, however, decided to use the fiscal stimulus to increase the country’s historically low productivity, improve the health sector’s resilience, accelerate a green transition, and push forward politically sensitive structural reforms. So far, Draghi has been able to hold together a large and diverse governing coalition and find space for compromise. No party, after all, wants to give up its say in the management of EU funding.
