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On the eve of the legislative elections, the Italian economy put to the test by the energy crisis

When he talks about his country, Luigi Consiglio is always inexhaustible. And above all very proud: “Political crises? The Covid? No problem: the Italian industrial fabric is among the strongest in the world, nothing can bring it to its knees”, praises this entrepreneur, president of GEA, a Milanese firm supporting Italian SMEs in their international development. For the past few weeks, however, his confidence has wavered. Many of the family businesses that are the strength of the Industrial North are finding it increasingly difficult to cope with soaring energy prices. “Some are running out of cash to pay the bills, it’s very worrying”he confides, suddenly gloomy.

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He is not the only one. “Between the fall in the Russian market, the jump in prices and the logistical disruptions linked to Chinese confinements, our territory is penalized and plagued by doubt”deplores Giovanni Dini, of the National Confederation of Crafts of the Marche region, rich in small businesses working in fashion, mechanical production and agri-food processing. “We are facing an economic earthquake”, was alarmed Carlo Bonomi, the boss of Confindustria, the Italian Medef, on 1er September, on Italian radio RTL 102.5. Before warning: “We cannot wait two months, the time it should take for us to have a new government.”

After the resignation on July 21 of Mario Draghi, the former President of the European Central Bank (ECB) who had assembled a “grand coalition” government in February 2021, the Italians go to the polls on September 25 to renew their Parliament. “The result of the ballot leaves little doubt: the far-right Fratelli d’Italia party, led by Giorgia Meloni, should come out on top”, predicts Marcos Carias, euro zone economist at Coface. This formation should be able to form a coalition with the League (extreme right) of Matteo Salvini and Forza Italia (liberal right) of Silvio Berlusconi. “The Mario Draghi parenthesis is closing, and this will have serious consequences for the economy”, believes Franco Pavoncello, professor of political science at John Cabot University in Rome.

Continuity in the reforms?

On closer inspection, Italy has nevertheless, despite the difficulties suffered by companies, resisted the energy crisis rather well – at least, so far. In the second quarter, the gross domestic product (GDP) thus progressed by 1.1%, against respectively 0.5% and 0.1% only in France and Germany. Consumption even jumped by 2.6%.

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