Reform in Italy: Gambler in a rush

MATTEO RENZI is known to be a risk-taker. This week, he is in effect asking his fellow euro-zone leaders to take a gamble as well. On March 20th the Italian prime minister travelled to Brussels to meet first the European Commission’s president, José Manuel Barroso, and then other EU political leaders attending the European Council. He had already visited Paris and Berlin. At each stop on his tour, he has had the same goal: to win some fiscal leeway for his plan to bolster Italy’s fragile economic recovery.Since 2010 Italy’s public debt has risen from 116% to 133% of its GDP. It is not the fault of the budget deficit, which has been trimmed from 5.5% to 3% of GDP and now shows a substantial primary surplus, ie, before interest payments. Instead the blame lies with the shrinkage of its economy. Italian GDP has fallen over the same period by more than 4% in real terms. Output recovered in the fourth quarter of 2013, but only by 0.1%. Mr Renzi wants to spend more, so that he can boost demand and economic growth. His hope is that this is an easier way to reduce the ratio of public debt to GDP.Hence the series of expensive measures, including tax cuts, that Mr Renzi…

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