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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