Analysis – Italy’s incurable economy (POLITICO)

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Italy’s economy is sick and the governing coalition can’t agree on the cure — among themselves or with Brussels.

The European Commission said last week that the government’s flagship measures — an early retirement scheme and a citizens’ income (a monthly allowance for certain jobseekers) — failed to trigger the growth the League-5Stars coalition had envisaged. To make matters worse, the forecast from Brussels was that the deficit is growing, and in 2020 it will smash through the 3 percent deficit-to-GDP ceiling imposed by EU rules, reaching 3.5 percent.

Prime Minister Giuseppe Conte said the forecast shows the “prejudiced attitude” of Brussels. His finance minister, Giovanni Tria, shrugged off Brussels’ concerns and the two ruling parties aren’t planning on backtracking on their plans.

As is often the case, the two uneasy government partners disagree on what’s important.

The League is pushing for a flat tax that would cost the state up to €60 billion in lost revenue, according to the Treasury’s own calculations (the League says the figure is closer to €13 billion). The 5Stars, led by Luigi Di Maio, are unconvinced a flat tax is a priority because it would benefit wealthier citizens over poor ones. Their focus is on the introduction of a €9 minimum hourly salary and providing more rights to people who deliver food by bike (for firms such as Uber Eats and Deliveroo).

Unsurprisingly, both ideas are disliked by their government partner, which thinks they would further restrict the job market.

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