The image of Italy provided by the Anglo-Saxon press may cause readers to build a distorted view of current conditions. Western media find it is easier to focus on the picturesque rather than on the substantive, not least because they have little familiarity with the latter.

The distorted view is of a Government led by a corrupt womaniser who cannot be taken seriously, and, by implication, of an administration of little value. The reality is of a Government which, in spite of some missteps and retreats, has been rather successful during its first eighteen months. It has dealt effectively with sudden or seemingly untreatable crises, it has supported the economy whilst keeping the public deficit comparatively low (for the times), it has launched important reforms, and it has managed to consolidate its popularity.

Admittedly, these achievements have been in part facilitated by external conditions. Italian banking had been rather unadventurous and has not been in need of the massive support that other Governments have had to provide. Italy is a country of high public indebtedness but low private debt, and her total non-financial sector indebtedness is below the European average. Politically, Berlusconi has been given an easy ride by an opposition whose leader resigned months ago and which has spent many months in a soul-searching exercise hardly suitable to captivate the electorate.

Yet, perhaps the entire political system, that is, the opposition as well, has handled the crisis better than might appear. It is especially noteworthy that the principal economic reforms launched by the Government during the last eighteen months have had the full or broad support of the opposition. Four reforms stand out: the federal transformation of public finance, public service modernisation, the relaunch of nuclear power and new pension rules. Majority and opposition have also tacitly cooperated in promoting the emergence of new industrial relations rules.

In the months ahead the Government will seek to pursue structural change through a reappraisal of regional policy, a reorganisation of local government, and a new National Health Programme. Much work will have to be devoted to implementating the reforms which have already been approved. Fiscal policy will remain on the sidelines, in spite of the Budget debate, all main important decisions having already been taken during the summer.

For the opposition the autumn will be important especially as the time to choose a new leader and a new line, just as the next big electoral test, the regional elections of spring 2010, begins to loom.

© 2009 Europrospects Ltd.