Can Italy’s Giorgia Meloni afford the things she wants?

Giorgia Meloni and her conservative allies won Italy’s election on September 25th with an economic programme not unlike the one unveiled two days earlier by Britain’s new chancellor of the exchequer, Kwasi Kwarteng. Its central aim was to boost the economy with large tax cuts. Employees’ welfare contributions would be cut. An unpopular regional corporation tax would be scrapped. And a flat-tax regime for the self-employed would be extended so that those with gross earnings of up to €100,000 would pay as little as 15%. The right also pledged earlier retirement for some and an increase in minimum pensions and child benefits. How was all this munificence to be paid for? Since the programme would boost growth, wages, profits—and thus the tax take—there was no need to worry too much about fiscal sustainability, the plan promised.

Oxford Economics, a consultancy, calculates that the right’s stimulus could add around 1.6 percentage points to GDP growth next year. But even assuming that some of the measures were phased in gradually, the increase in output would come at the cost of higher inflation and a budget deficit of about 6.2% for the next five years.