Italy in 2018 and France in 1981

The economic policies currently being implemented by the Italian government resemble those implemented in 1981 by the French government after the election of François Mitterrand : Fiscal deficit, increase in public spending; More generous pension system; No correction of the deterioration in companies’ competitiveness and profitability. In France in the early 1980s, the fiscal deficit, the loss of competitiveness and the resulting external deficit led to a rise in interest rates and a series of devaluations, and then to a fiscal and wage austerity policy . Nowadays, Italy cannot improve its cost competitiveness by devaluing. We should therefore expect an even more pronounced deterioration in the economy, combined with a rise in interest rates, forcing the country to switch to an austerity policy even faster than in France in the early 1980s.