The Italian and EU flags hang side by side from the facade of a government building in Italy. Italy's leaders have long championed the cause of European integration, but the country's incoming government has promised to try to reverse the process.
Italy's future government promises to break with the past. The incoming coalition, made up of the anti-establishment Five Star Movement and the right-wing League party, has plans to reverse years of austerity measures, reassess Italy's foreign policy priorities and renegotiate its links with the European Union. Many of the items on its agenda are expensive. Initiatives such as reducing the income tax, increasing subsidies for poor families and abolishing a recent reform that raised the retirement age, for example, stand to drive up public spending while diminishing state revenue. These measures could also deepen Italy's deficit — not a minor concern for a country whose public debt exceeds 130 percent of gross domestic product. More important, the Five Star Movement and League want to revise the EU economic governance framework, including the rules that establish debt and deficit limits for member states.
