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This Monday, January 24, is the start of the Italian presidential election. Will “Super Mario” become the super president of Italy? This is the question that agitates economic circles: the outcome of the vote might call into question the rather flattering results of Mario Draghi at the head of the Italian government for barely a year and candidate for the supreme investiture.
In Italy, this ballot is complex and opaque. A candidate must gather a two-thirds majority of a college of electors from Parliament to be declared victorious. Discreet and often unexpected negotiations are the prerequisite for the vote, which is why even if Mario Draghi is adored by the Italians, with 60% of favorable opinion, his election to this function of representation is not won in advance. Some tenors of the Italian political class support him for the presidency of the Council, but they do not want him as president, because they suspect him of wanting to lead the country secretly during his next seven years of his mandate.
On the economic level, the action of Mario Draghi is unanimous
With a growth rate of more than 6% in 2021, and major reforms on the way, that of justice which should reassure foreign investors, and that of the administration to make it more efficient, the Italy of Mario Draghi has regained punch and credibility on the international scene. In December, the British weekly The Economist named it country of the year. The pandemic has deeply bereaved it and destroyed its economy, it also gives it a unique chance to bounce back with the allocation of record credit from European authorities. Italy will receive, in the form of grants and loans, 191 billion euros over the next six years. It is the first beneficiary of the European revival, provided that it carries out the reforms proposed by Mario Draghi.
How might this prodigious recovery be called into question by the result of the presidential election?
If Mario Draghi is elected, no one knows if he will succeed in imposing the man or woman of his choice at the head of the executive to pursue the reforms and thus retain the confidence of his European peers and the markets. And if he is not elected, his days at the head of the presidency of the Council being limited by the next legislative elections scheduled for next year, Italy would quickly lose its providential man. What, there too, to strain the nerves of investors, because the Italian economy remains sick and over-indebted.
Its public debt represents 160% of its GDP: twice the threshold authorized by the rules of the euro
The most immediate risk is a new debt crisis: with the rise in US rates looming, European rates might also quickly rise. Borrowing will cost Italy more and more, too much! Even if the godsend of the European recovery plan relativizes this risk, it is indeed the major concern of the moment. Because basically, the Italian economy is still fragile and suffering: the GDP is still far below its level before 2008, before the great financial crisis; its industry does not invest enough to remain competitive, and above all the State does not invest enough in its youth. Poorly trained by the education system to meet the demand of companies, it is now laminated by unemployment. Italy more than needs to keep its magician to maintain confidence.
► In brief
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