Two of Europe’s largest economies now have new leaders: Giorgia Meloni in Italy and Rishi Sunak in Britain. Political and economic commentators are now drawing comparisons between the two countries. But one thing most agree on is that both prime ministers have been handed poisoned chalices.
In the last few weeks, the international media has revealed details about the personal background of these two leaders. Sunak is a multi-millionaire who entered politics seven years ago and is renowned for his modesty.
Meloni had a much humbler beginning when she grew up in a financially distressed family. She is one of the more successful far-right leaders, having militated in the post-fascist Movimento Sociale Italiano in her youth. Both share their young age – Sunak is 42 and Meloni is 45 – and understandably have limited government experience.
Both prime ministers face similar challenges, even with varying severity. One shared challenge is that of a united cabinet. One should never underestimate the dynamics of conflict behind closed doors in political parties, especially when they are in government.
Sunak sparked political chaos in the usually peaceful British political scene when he resigned in protest at Johnson’s political strategies. He has now appointed a “unity cabinet” that is supposed to represent all the factions in the splintered Conservative Party. Still, it is no secret that about 100 MPs sitting on the backbenches do not forgive him for his “treacherous” actions against their favourite Johnson.
Meloni shares the same risk of living with two other leaders in her coalition who most consider untrustworthy allies. Silvio Berlusconi, leader of the steadily declining Forza Italia, and Matteo Salvini, the populist leader of La Lega, have often shown affection for Russian president Vladimir Putin. Salvini’s anti-EU rhetoric goes against the stand taken by Meloni since taking over as prime minister. But some analysts see her as a female version of Viktor Orban, Hungary’s prime minister, who is constantly at loggerheads with the EU over his regime’s corruption and autocratic tendencies.
A second shared challenge is that of balancing the books of the state. For a long time, Britain has considered itself part of the same elite economic club as America, France and Germany. It is, after all, the third-biggest economy of the West. But Britain’s living standards, measured by real GDP per person, have not risen since 2000 due to sluggish economic growth caused by underinvestment and lacklustre productivity.
Italy’s economic challenges are even more daunting. Italy’s ageing population is growing faster than in the UK. Its courts and public administrators take decisions at a snail’s pace, which impedes small businesses from growing. So far, every administration has failed to tackle the massive regulations that frustrate business expansion and international institutions like the IMF.
Both prime ministers have been handed poisoned chalices
Linked to economic underperformance, one must add the deteriorating fiscal situation. Admittedly, Italy faces a more dangerous risk. Sunak did not mince his words in his first speech to the nation after being appointed prime minister. He warned that tough decisions had to be taken to put public finances on a safer level and avoid retaliation from financial markets.
While not mentioning the word “austerity”, which seems to have been obliterated from political speech, the British public does not doubt that tough spending cuts will likely affect the level of public services like the NHS. One must add the risk of widespread strikes over public sector pay. Telling nurses and teachers they cannot have a pay rise because the country can’t afford it could be a tougher sell for a prime minister with a gilded lifestyle.
Meloni faces even more formidable fiscal challenges. Its national debt hovers around 150 per cent of GDP. The debt burden can only become more extensive with the European Central Bank determined to control inflation by increasing interest rates.
She may have sent the wrong signal when she caved in to Salvini’s demands to push for tax reductions by introducing the flat tax. Meloni also agreed to raise the limit of cash transaction to €10,000. Italy’s well-documented tolerance of corruption in politics and business circles, combined with endemic organised crime, does not endear the country with financial markets.
Selling the necessary reforms to restore health to Britain’s and Italy’s economies will be tough. The Conservative Party in Britain has a majority of 80 members in parliament, but only a minority of Britons support it, according to opinion polls. Less than half the Italian electorate supports Meloni’s coalition.
Italy and Britain may be living in the relative calm that comes before a storm.