In Italy, the populist parties have put an end to Draghi’s
technocratic government. Early elections and a stop to pass the necessary reform legislation might hold back further funding from NGEU and the economic recovery. The perspective of a right-wing government, led by a formerly fascist party does not exactly raise
confidence either. At the same time, the ECB faces further pressure to fight inflation and sovereign fragility at the same time; as before, Italy will provide the proof to which extent this can work. The new programme (Transmission Protection Instrument,
also known as To Protect Italy) has the potential to reopen the political tensions between North and South. At the same time, a new conflict has been opened, between countries that have created energy dependence on Russia over the past decade (most prominently
Germany) and others (such as Spain). In the other main European countries, things do not look much better. President Macron lost his parliamentary majority (on the upside, this increase in checks and balances might make reforms more sustainable). In Germany,
Olaf Scholz is still struggling with the Putin-friendly wing of his own social democratic party. At the same time, Hungary’s regime is going a step further and trying to cosy up to Putin as much as possible.