Italy’s economy grew by 0.2% compared with the previous quarter, ending a short recession
If the League wins more of Italy’s 73 European Parliament seats than its rivals do on May 26th, it will become the dominant coalition partner . But a good result could also tempt Mr Salvini to put an end to the League’s relentlessly fractious coalition with the more moderateand force a snap election that would give him the votes needed for a more homogeneously right-wing coalition with the formerly neo-fascist Brothers of Italy and what is left of Silvio Berlusconi’s Forza Italia party.
The commission also cut its forecast for Italy’s growth this year from an already feeble 0.2% to just 0.1%. The economy remains acutely dependent on its exporters. Net of energy, Italy’s trade surplus has grown from 1.4% oflast year. “I’m pretty sure there isn’t another country that can boast of having tripled its trade surplus in that time,” says Gregorio De Felice, chief economist of Intesa Sanpaolo, a bank. As the commission notes, though, the outlook for world trade is particularly cloudy.
Hence Mr Salvini’s reaction to the end of the recession, which was to press for sharply lower income taxes as well. But that also explains why a government crisis after the European elections could lead Italy back into a vicious spiral of market fears over its ability to repay its debts leading to higher borrowing costs and an even bigger deficit. A populist right-wing government under Mr Salvini might be more homogeneous and harmonious. But it could be even more fiscally adventurous.
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