Italy

Political Outlook
SWOT Analysis
Strengths
A resilient democratic political culture which, despite frequent crises
in governments, has lasted for nearly six decades. Italy is an active
and influential EU member.
Weaknesses
A continuing vulnerability to corruption at various levels within the
political system, and an antagonistic relationship between the judiciary
and politicians. Theability of strong and entrenched pressure
groups – from trade unions through to corporate lobbies – to resist
reforms, creating a high level of inertia.
Opportunities
T he emergence of a two-party system in Italy offers the opportunity
for greater political stability for the medium term. This could yet spell
the end of the era of ‘revolving door’ cabinets.
Threats
C onstitutional reform hasbeen floated, which would increase the
powers of the prime minister or president. If the government does
go down this path, it could lead to some political ructions.
BMI Political Risk Ratings
Italy’s political risk profile is likely to deteriorate further in 2010 as confidence
in Berlusconi’s leadership is likely to slide alongside support for his
coalition government. In particular, wecontinue to stress that Berlusconi’s
personality will continue to dent his image both at home and abroad,
while several high-profile trials for corruption and tax evasion could
further hit public sentiment. Moreover, with unemployment rising and
public services likely to be cut back in a bid to shore up public finances,
there are ongoing risks of widespread strike action and public protests.
S-TPolitical Rank Trend
Norway 99.2 1 =
Switzerland 95.6 2 =
Denmark 94.4 3 =
Sweden 91.5 4 =
Finland 91.0 5 =
United States 88.1 6 =
Australia 86.5 7 =
Canada 86.3 8 =
Netherlands 85.2 9 =
Japan 84.8 10 =
Germany 84.4 11 =
Ireland 83.5 12 =
France 82.9 13 =
New Zealand 82.1 14 =
Portugal 80.6 15 =
Italy 79.0 16 =
United Kingdom 77.5 17 =
Austria 77.5 18 =
Iceland 73.3 19 =
Spain72.5 20 =
Cyprus 63.8 21 =
Greece 63.3 22 =
Belgium 54.0 23 =
Regional ave. 81.6 / Global ave. 67.0 / Emerging Markets ave. 64.4
L-T Political Rank Trend
Norway 99.0 1 =
Switzerland 95.5 2 =
Sweden 95.0 3 =
Denmark 93.5 4 =
United Kingdom 92.5 5 =
Finland 91.8 6 =
Austria 91.0 7 =
Japan 87.1 8 =
Ireland 86.3 9 =
Germany 85.8 10 =
Canada 85.3 11 =
France 84.0 12 =
Iceland 83.6 13=
Australia 83.0 14 =
Netherlands 82.6 15 =
Greece 82.3 16 =
Portugal 82.2 17 =
United States 81.2 18 =
Italy 80.3 19 =
Spain 80.2 20 =
New Zealand 76.7 21 =
Belgium 74.7 22 =
Cyprus 68.9 23 =
Regional ave. 85.3 / Global ave. 63.3 / Emerging Markets ave. 59.4
6 www.businessmonitor.com Business Monitor International Ltd
Italy Q3 2010
Domestic Politics
Growing Risks To Berlusconi’sLeadership
BMI View
The popularity of Italy’s controversial prime minster, Silvo Berlusconi,
continues to deteriorate. An ongoing corruption scandal, contentious
fiscal consolidation plan and a rift with the parliamentary speaker are
eating away at the strong support base which previously ushered the
prime minister to power. While we do not expect the government to
collapse in the shortterm, we warn that there is a growing risk that
Berlusconi’s leadership will be challenged over the medium term.
Having long warned about the risk to Italian Prime Minister Silvo
Berlusconi’s popularity from his highly publicised antics and
allegations of corruption, latest opinion poll data suggest that
a major turning point may have been reached. According to a
June poll conducted by Demos &Pi, only 42.5% of respondents
pledged their support for the controversial prime minister, down
from 48.3% in February and below the 50% plus levels which
prevailed after Berlusconi was elected in 2008. The deterioration
in popular support comes on the back of a controversial fiscal
austerity package, moves to curb police wire tapping (which
opponents suggest will make it more difficult to...