Italy Gets a Taste of Boris Johnson’s Cake

Italy’s populist dream team has a radical plan to revive the country’s economy. Successive drafts of the coalition agreement between the League and the Five Star Movement, seen over the past few days, show the two parties are keen to press ahead with their lavish tax cuts and spending pledges, in spite of Italy’s mammoth public debt.

There’s a double contradiction at the heart of this program, though. The League and Five Star are asking the rest of the euro zone to help them fund their expensive promises – even though they go against the bloc’s budget rules. And while any such government would face a resounding “No” from its European partners, the populist groups don’t seem prepared to leave the currency union whose rules they so despise.

The initial draft of a government contract between the two parties includes a “citizens’ income” – an income support scheme that would cost about 17 billion euros a year ($20 billion). The two parties expect the EU to contribute up to 20 percent of its European Social Fund to this. A first draft of the document also called on the European Central Bank to cancel 250 billion euros of Italian debt – although the two parties have backtracked on this. They now say they only want accounting changes, permitting all euro zone states to exclude any debt bought by the ECB from the calculation on whether they’re exceeding borrowing limits.

Still, the paradox is clear: the League and Five Star want the euro zone to help Italy just as Italy steps away from the rules.

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Italy Gets a Taste of Boris Johnson’s Cake

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