Italy at a Crossroads - by Emanuele Schibotto

It is now a year and a half since Matteo Renzi took over as Italy’s Prime Minister on February 22, 2014.

Since then, Mr. Renzi, who is the second-youngest national leader in Europe, has sought to deal with the difficult task of implementing the much-needed economic reforms demanded by the European Union and the International Monetary Fund.

Renzi is keen to restore market confidence and revamp the Italian economy (real GDP will post a poor 0.7% of growth in 2015 and 1.2 in 2016, according to the IMF).

Actions have been taken to boost job creation and growth, improving domestic competition and easing the burden of bureaucracy — which impedes an otherwise dynamic private sector.

“If fully and effectively implemented, these reforms could contribute to improving competitiveness and addressing some long-standing obstacles to growth,” wrote the European Commission in a recent report.

Despite this progress, Italy remains under close scrutiny from international markets – and for good reasons. Unemployment is over 12%, GDP growth is sluggish and perhaps most critically, the economy is still 9% below the peak it reached before the global financial crisis unfolded in 2008.

Read more: Italy at a Crossroads - The Globalist

Italy: Matteo Renzi stands firm at Italy′s helm

Three years ago, I stood in the majestic office of Matteo Renzi in Florence's imposing Palazzo Vecchio and listened to the then 37-year-old mayor of the Renaissance city wax enthusiastic about a lost Leonardo da Vinci painting,

"The Battle of Anghiari," which Renzi said was very likely located on a hidden inner wall underneath a fresco in the palace. He told me that within days city hall would hold a press conference with an exciting announcement about the masterpiece.

At the time, Italy's mammoth debt threatened to derail the euro, Berlusconi had unceremoniously stepped down as prime minister, and Mario Monti was heading up an interim technocrat government.

Despite the dire mood in the country, Renzi expressed as much faith in his fellow Italians - well, most of them - as he did that the Leonardo masterpiece would soon be uncovered.

Read more: Matteo Renzi stands firm at Italy′s helm | Europe | DW.DE | 22.02.2015

Europe's Fresh New Politicians: Economic reform in Europe: The rise of the Vallenzi

Matteo Renzi  (Italy) and Manuel Valls (France)

In the the smouldering economic landscape of the euro zone, the future is riding on two men. In France Manuel Valls ,  is leading the most reformist government in years.

In Italy, whose economy is in even worse shape than France’s, Matteo Renzi  is also talking of change. Both have been in office for barely half a year and have a promising Blairite agenda. But the Vallenzi are also open to the same criticism: that as far as reform goes, they are all mouth and no trousers.

France and Italy pose a grave threat to the single currency. They are the euro zone’s second- and third-largest members. Growth in France is flat and unemployment stuck at over 10%. The budget has not been balanced for 40 years, and public spending takes 57% of GDP—far the highest in the euro zone. Italy is no better. It is in recession, and its debt is over 130% of GDP.

They are also laggards in reform. Whereas Spain has started to get to grips with its structural problems, France’s Socialist president, François Hollande, has not even tried. Instead of reducing taxation, he has raised it. Instead of encouraging business, he has added to its burdens. Instead of promoting reforms, he has avoided them. In Italy, a series of well-meaning prime ministers have been unable to overcome the formidable vested interests that see reforms as a threat to the special deals they have carved out.

This combination of size and lassitude is dangerous, because France and Italy are at once too big to fail and too big to bail out. But the two countries’ governments now offer reason for hope. Mr Renzi has overseen constitutional change that should make it easier to force through reforms, and promised a “revolution” to speed up justice and promote investment.

Mr Valls has reshuffled his government to dump its most leftist anti-reformers. He sounds pro-business and promises to cut spending, reform welfare and the labour market and open up protected professions. The 35-hour working week is being made more flexible, and the top tax rate of 75% will lapse next year.

Until now Mr Hollande’s unpopularity has been a weakness, but as the least-popular president in the history of the Fifth Republic, backing Mr Valls may be his only chance. After two years of failure, French voters seem to understand that there is no alternative to reforms: they are now even in favour of working on Sundays. Mr Valls may also get most Socialist deputies to accept change by threatening fresh elections if they do not.

Read more: Economic reform in Europe: The rise of the Vallenzi | The Economist