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Matthew Goodwin @GoodwinMJ
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Once upon a time in Italy ....

A thread
Tomorrow could bring confirmation of a new government between the populist 5 Star movement and the hard right League
Predictably, this has already generated countless headlines warning about evil populists and misinformed voters
But it's worth looking closely at what is actually happening in Italy, where this result has come from and why things are unlikely to change over the long term...
First, the economic context.
This is how Italy's unemployment rate has fared over the past decade
It's been above 10% for a while now
And just for reference, here is what Germany's unemployment rate looks like
i'll come back to this later on
This is how that unemployment in Italy looks geographically

(The populist 5 Star hoovered up votes in the south)
Looks bleak, right.

But the picture looks even worse if you happen to be a young Italian

This is youth unemployment 2010-2016
And the blunt reality is that things are not going to get better anytime soon

No matter who is in power

And most people in Italy already know this
One of the big problems is debt

Italy's debt to GDP ratio is now a rather sobering 130%

Only Greece has a higher one
I'll come back to that too, but many people in Italy associate these entrenched economic problems with the euro single currency and the EU
So one basic problem for the EU is that unless it can get the Italian economy moving again then public opposition to the EU will only increase further
I mean, look at what is already happening
Many Italians are ALREADY fed up with the euro single currency
They also happen to be the 3rd most dissatisfied in Europe with how "democracy" is seen to be working in the EU

After, um, Britain and, um, Greece
They are also already more likely than average to say they distrust the EU

In fact, more than half of people in Italy feel this way
And two-thirds of the Italian population openly reject the idea that "their voice counts in the European Union"

Once again, they'd have a lot in common with the Brits
Only around 1 in 3 say they feel "positive" about the EU

In fact, while we're here only 40% across Europe feel this way
So even before you get to things like the new populist government and it's programme you already have a population that is tired, fed up and rather disillusioned with the EU and the European project
Enter the populists. Here was one poster run by the hard right League

"Slaves of Europe? No thanks!"
The truth, even if it is a somewhat controversial point, is that the argument is not entirely without merit
Though few will say it, in reality Italy should never have joined the euro single currency - it had too much debt and its institutions were too weak
The numbers speak for themselves

Today the country's per capita GDP is lower than it was when the Eurozone launched
This basically means that most Italians are poorer today than when they joined the Eurozone nearly 20 years ago
Germans prospered, Italians retreated
So riding the wave of disillusionment, the new government now proposes large-scale spending via a universal basic income for the poor, billions of euros in tax cuts and the scrapping of plans to raise the retirement age
Except, er, nobody really knows how Italy will pay for all of this
(in what is already one of the most indebted nations in the Western world)
Some economists estimate the plans, if enacted, will add approx €100 billion a year to state spending
Which by extension means Italy is almost set to break the EU's tight rules on deficit limits
which in turn will mean at some point a showdown between Italy and Brussels
Only this time around Italy's political leaders are instinctively Eurosceptic
Both 5Star and the League have openly voiced their criticism of the Eurozone area and the EU at large, the latter more than the former
They have certainly rowed back on their earlier pledge to hold a referendum on the euro but what would happen amid a fresh crisis?

The threat of "going to the people" is a handy card for a populist to have up their sleeve
This is the bit where usually a political scientist or lawyer says "yes but that would be unconstitutional". That argument is overplayed. There would be ways around it.
Unsurprisingly, the Germans are already nervous…
And they have good reason to be

Italy alone accounts for around a quarter of the Eurozone's non-performing loans
This means that if the Italy ship sinks it will cause some serious collateral damage
But another big problem in all this for Brussels is that it isn't only about economics
If it were i think it would probably be easier to handle
Across Europe, Euroscepticism -public hostility to the EU- is being driven by two key drivers
One is anger among the economically threatened who are usually described as the "losers of globalization" -- (there are lots of them in Italy, as we have seen)
The other is deep anxiety among the culturally threatened -an alliance of traditional social conservatives and blue-collar workers who feel very anxious about immigration, refugees and multiculturalism
This is why, I think, the EU is in such a fragile place right now

This is not the 1990s when Euroscepticism was mainly a fringe-ish phenomenon rooted mainly in economics/worries about political transparency
Today, we have lots of research showing how public opposition to the EU is mainly being fed by two things -- economic angst and cultural anxiety
Unfortunately for the EU it has been generally very poor at responding to both of these things but especially the latter
Today, the refugee crisis, which has coincided with the arrival of Islamist terrorism, has poured gasoline on the cultural driver
This again is where we find Italy at the epicentre
Around 75% of the migrants arriving in Europe now land in Italy
And this has generated some really important shifts among ordinary Italians
When you ask Italians to name the top two issues facing their country they say
1. Unemployment
2. Immigration
This is how concern over immigration in Italy rocketed from 2014
And how the League partly rode that wave

(work with @JamesRDennison)
"There are too many immigrants in our country"

Only Turkey is ahead of Italy
Enter the populists - who have proposed to do the following:

-speed up repatriation of refugees and migrants
-close illegal Roma camps
-set up a register for imams
-greater scrutiny of mosques and their financing
-shut down "radical Islamic associations"
We need to be clear about what is going on here
A big reason we are here is because the EU member states failed to help Italy deal with a refugee crisis that the Italian people neither created nor asked for
Despite much talk about European "solidarity" few member states sought to help Italy deal with the sudden arrival of refugees and their reallocation
So now Italy and its new government will move increasingly closer a new alliance of socially conservative member states that are actively opposing what you might call the "liberal" wing of Europe
One of the first things the leader of the League (Salvini) did was praise Viktor Orban -the leader of Hungary who wants to defend "Christian Europe"
Salvini has said similar things. Not long ago he said Italy should follow Slovakia by only accepting "Christian" refugees…
So the EU will find this new divide over values and identity increasingly coming to the forefront - not least with Salvini and co. in the corridors of power if not the Interior Ministry
There is currently no response to this (or indeed the refugee crisis more widely)
One recent idea pitched by Bulgaria with support from Germany might actually make the whole situation even worse
Under the Dublin agreement, any refugee or migrant who lands in an EU state must register and cannot seek asylum elsewhere for six months
The new proposal is to extend that period to ten years
This means that if you accept the argument that major demographic pressure will continue to face Europe then frontline states like Italy could be left with a much larger load
How do you think that will go down among ordinary Italians?
So we have entrenched economic stagnation, widespread angst over immigration and what looks potentially to be one of the most radical governments in many years
This is another blow to the "everything is fine with the EU" narrative that some have tried to push after Brexit
The wind is most definitely not back in Europe's sails
To Italy we can add populism in the East, Brexit, Catalonia and north->south as well as West->East inequalities that will continue to stretch the EU & exacerbate divides
The EU might muddle through because that is what the EU tends to do, but the challenges are not only growing in number but also size
One last comment about where things are heading - do not fall into the trap of thinking this is generational - the "angry old white man"

It most definitely is not
This is the age breakdown for 5Star and the League

5Star skews toward the youth, the League fairly even across the generations
So when you put all of this together the challenge that Italy poses to the EU is very real, deep rooted and looks set to be long-term. All is not well in Brussels /ends
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