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Italy’s public sector reforms face uphill battle

Wednesday, May 12, 2021

Significance

The PNRR is vital to revive growth in the EU’s most fragile economy. In addition to providing foundations for a strong economic recovery from COVID-19, the PNRR also focus on broader structural reforms that have long constrained competitiveness. Among these, radical change to public administration is a key element.

Impacts

  • Perceptions that the recovery plan is struggling would damage financial-market confidence in Italy’s capacity to survive in the euro-area.
  • Slow progress on the recovery would also entrench opposition in northern Europe towards deeper EU fiscal integration.
  • Polling support for the far-right League party has been declining, which could force it to withdraw from the Draghi government.

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