Time for Renzi to turn talk into action

02.06.15 Publication:

For a man who likes to give the impression of incessant activity,to be told “pull your finger out” might seem ungrateful. But that is
the message given by Italy´s regional elections to the country´s youthful and
reformist prime minister, Matteo Renzi. There was also a message to other
governments in the European Union: “don´t take us Italians for


European leaders are thoroughly accustomed to the rise of
populist, often anti-EU, always anti-establishment parties all over the
continent, in Greece, Spain, Poland, France, Britain and elsewhere. But not in
Italy. There they have been comforted by the fact that the insurgent, the
breaker with the past, has been a liberal pro-European from the centre-left, Mr
Renzi, and that despite pushing for reforms he has been riding high in the


Sunday´s elections, however, threw a bucket of cold water over
that idea. Mr Renzi´s Democratic Party won in its traditional strongholds such
as Tuscany. But the real star of these polls was the anti-euro and anti-immigrant
Northern League, which made big inroads in both northern and central Italy. And
the purest protest movement of all, the Five Star Movement led by the comedian
Beppe Grillo, showed that voters still think they have plenty to protest about
by winning 15-20% vote shares in several regions.


Why the ingratitude? It´s the economy, pazzo.
Statisticians may claim to have detected a modest return to growth over the
past few months, helped by cheaper oil and a falling euro, but it will take a
long time before Italians notice any difference. Unemployment is stuck at 13%
of the labour force and household incomes have been drifting downwards for as
long as most can remember.


Meanwhile Mr Renzi talks a good game of reform and revival, but
what has he actually achieved? A labour-law reform that will eventually make it
easier for companies to create full-time jobs, but only once they feel they
actually need more workers. And his biggest achievement has been a new
electoral law that took more than a year to negotiate and which passed
parliament a month ago. No one´s job will be protected or created by that,
except perhaps that of Mr Renzi himself.


Sunday´s elections show that even that cannot be taken for
granted. Since February 2014 when he took office by deposing his predecessor
Enrico Letta in a party coup, he has bet his political capital on
constitutional reform, arguing that only with a strong government and a simpler
political system could fundamental improvements be made.


That may be right in theory, but in practice it could take too
long: the new electoral law does not take effect until July 2016. So having
foregone the chance of snap elections last year when his popularity was at its
peak, he will have to labour until then in the same trap as he faced when he
took power: with no parliamentary majority of his own he depends on support
from the old stager Silvio Berlusconi, and his weakened right-wing party, Forza


What this means is that Mr Renzi really must now heed the voters´
message: he must pull his finger out and work to get the economy moving. That
means new laws to clear away obstacles to creating new businesses or
restrictions to  competition, moving
faster to speed up the justice system to give investors more confidence in the
enforceability of contracts, and following France´s example by stretching the
euro´s fiscal rules further to help support demand in the economy. He even
needs to push for those fiscal rules to be changed to permit more public


The basic question for Mr Renzi now is: does he really stand for
change and a better future for Italy, or is he all talk and no action?