Despite the Quantitative Easing, the devaluation of euro, the lower price of oil, sweeping reforms and stimulus measures adopted by the Government, the Italian economy still gives mixed signals at best, as certified by a surprise increase in the unemployment rate.
Meanwhile the polls point at a resurgence of the Five Stars Movement, boosted by a wave of judicial scandals involving the Democratic Party.
Many of Mr Renzi’s reforms were unpopular and controversial, and if they fail to bring results in the long run the popular support for the Prime Minister could seriously erode. Significantly, Mr Renzi recently promised that there will be no more “sacrifices”. He has always been very sensitive to the mood of the public, and he (or his consultants) probably perceived a risk of discontent. In the name of recovery, his Government and his Party abrogated or profoundly amended some laws which were considered a cornerstone of the Italian system, above all the Statute of Labor.
It is unlikely that Mr Renzi will leave Chigi Palace, the official seat of the Government in Rome, anytime soon. He is simply too strong, and the opposition is simply too weak. However, his political power could diminish resulting in a period of stagnation reminiscent of Mr Berlusconi’s two decades in power.