Hanging In The Balance

OK, this blog is about to ramp up again after the extra-long sleepy summer. Actually I have been quite busy, but with non-Italy issues. Hence the silence here. Of course there won't be a post everyday. Maybe once a fortnight.

Things do seem to be starting to move again after the fairly brief honeymoon:

Prodi defends reform plans against rising discontent

Romano Prodi, Italy's prime minister, on Monday sought to calm growing unrest in trade unions and on the left wing of his ruling coalition over plans for budget cuts and pension reform.

The confrontations were a sign that, less than four months after he took office, Mr Prodi may soon face as much trouble from his nominal allies on the Italian left as he does from the centre-right opposition led by Silvio Berlusconi, the former premier.

Unions are preparing massive disruption to Italy's transport systems this month, with a strike on Thursday in the air sector to be followed by shutdowns of municipal public transport on September 15 and the national railway network on September 27.

The planned protests highlight Mr Prodi's difficulties as he tries to restore order to Italy's public finances and introduce long overdue structural reforms in the economy.

While international financial markets and the European Commission regard such measures as essential, Mr Prodi must take care not to lose the support of the leftist elements in his coalition on which he depends for his slim parliamentary majority.

This was always going to be the big issue. This year is still one of 'grace' for the Italian government, and the Italian economy. Of course it is a boom one. Next year is going to be much tougher, as the global economy slows, and the fiscal cuts take effect. And we will be hear on the Italian Economy Watch to follow this through.