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Italy's Draghi Recovery at Risk

The Next Generation EU pandemic recovery fund has delivered to Italy a once-in-a-generation opportunity to reset its economy. But the risks posed to Prime Minister Mario Draghi’s government by the looming presidential election may make the country incapable of seizing this moment.

LONDON – As Italy scrambles to control surging COVID-19 infections – including by making vaccination compulsory for anyone over 50 – cracks are appearing in the broad ruling coalition led by Prime Minister Mario Draghi. A crucial test will come next week, when Italy’s 630 members of parliament, 321 senators, and 58 regional representatives elect a new president.

Many names have been put forward, including former Prime Minister Silvio Berlusconi, who appears to have the backing of the center-right bloc, despite a long history of scandals and a tax-fraud conviction. Another leading contender is Draghi himself, who has built a strong reputation as a highly capable leader.

Following two decades of stagnation, Italy’s economic outlook is bright. After shrinking by nearly 9% in 2020, GDP grew by more than 6% in 2021, largely owing to the government’s expansionary fiscal policy, funded by the €750 billion ($856 billion) Next Generation EU recovery fund.

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