The UK Internal Market Bill 2019-21 will return to the House of Commons for consideration of Lords amendments on 7 December. This paper explains the central issues and the reasons for the amendments.
Documents to download
The new Italian Government (770 KB, PDF)
Italian Political Developments since the 1990s
On 1 June 2018 the new Five Star Movement – League government headed by Giuseppe Conte as Prime Minister was sworn in by the Italian President.
This brought the Five Star Movement into government for the first time. The League (previously known as the Northern League) had previously been in government as a member of Silvio Berlusconi’s centre-right coalition which governed Italy briefly in 1994 and then from 2001 to 2006 and from 2008 to 2011.
Between 1994 and 2018 there was a degree of alternation in government between the centre-right and a centre-left coalition grouped initially around the Left Democrats (DS) and more recently the Democratic Party (PD), created out of a merger of the DS and centrist forces.
Berlusconi resigned as Prime Minister in 2011 amidst pressure from the EU to reduce Italy’s huge public debt, judicial investigations against him and revelations around his private life, and defections from his own coalition. He was replaced by former European Commissioner Mario Monti, who implemented a number of reforms aimed at reducing Italy’s debt.
The emergence of the Five Star Movement (which is harder to place on the political spectrum) as a leading party at the 2013 and 2018 elections has meant that neither the centre-left coalition nor the centre-right have been able to command a parliamentary majority.
Following the 2013 elections, the centre-left and part of the centre-right (though not the League) initially formed a grand governing coalition. After Berlusconi withdrew support, a smaller part of the centre-right broke away, enabling a predominantly centre-left coalition to remain in power until 2018.
In the election on 4 March 2018, the Five Star Movement emerged as the leading party (with 32.7% of the vote). The centre-right was the leading coalition with 37% of the vote. The League (with 17.4%) overtook Berlusconi’s Forza Italia as the leading centre-right party, also winning a significant vote share in Southern Italy for the first time after its re-branding as a national force. Following weeks of negotiations, the League broke away from the centre-right to agree a government deal with Five Star.
Economic and Political issues
Italian government debt stands at 132% of GDP, the highest in absolute terms within the EU. However, the government is currently running a budget surplus.
Italy has been strongly affected by the global slowdown of 2008–09 and the ensuing sovereign debt crisis, following which it suffered a triple dip recession. Between 1999 (when the euro was adopted) and 2016 the average annual growth rate in Italy was zero. The current growth rate remains low and is predicted to be the lowest in the EU this year. Unemployment remains high at over 11%, and is much higher in the south and among young people.
Italy is the main port of entry for irregular migration to the EU. Around 630,000 migrants arrived via the precarious Mediterranean sea crossing from North Africa (and with many perishing at sea) between 2014 and 2017. Italian political leaders have complained about the lack of EU attention and assistance in dealing with these arrivals.
There has been a marked reduction in the number of arrivals since last year, following an agreement which provides for Italian assistance to the Libyan authorities to prevent migrants making the crossing.
Previously one of the most Europhile countries in the EU, Euro-scepticism has increased in Italy, with analysts attributing this to the perceived impact of euro membership and associated eurozone rules and a perception that Italy has been left to bear the brunt of the migration crisis without adequate assistance from its EU partners.
Both the League and the Five Star Movement have employed hostile rhetoric towards the EU, with the League more outspoken in its calls for Italy to leave the euro. Over the last year the Five Star Movement has dropped its previous calls for a referendum on the euro.
Although Italian opinion polls show low levels of confidence in the EU, there is still majority support for remaining in the EU and for continued participation in the eurozone.
The Northern League’s principal demand was greater autonomy (and sometimes independence) for Italy’s northern regions. After appearing to be in decline following a corruption scandal and poor electoral performance, it has been revitalised under Matteo Salvini’s leadership since 2013.
Salvini has rebranded the League as a national force, using the slogan “Italians first,” downgrading its previously defining issue of regional autonomy and making its previously held anti-immigration and anti-EU positions a more central focus.
Following the 2014 European Parliament elections, the League joined the far-right Europe of Nations and Freedoms group in the European Parliament.
Salvini has called the euro a “crime against humanity”, said that Islam is incompatible with European values, and referred to a migrant “invasion” of Italy. He has blamed violence against migrants in Italy “on those who have filled it with illegal immigrants.”
Among the League’s election campaign pledges, Salvini said that the League would implement a plan to deport 100,000 undocumented migrants a year over five years.
Salvini praised the UK vote to leave the EU in 2016 calling it “a beautiful day” and suggesting that Italy needed to follow suit.
The Five Star Movement
Founded in 2009 by political satirist Beppe Grillo in 2009, the Five Star Movement has taken a populist anti-establishment line, with vehement attacks on Italy’s ruling elites.
Five Star is difficult to place on the left-right political axis. It originally attracted former voters of the centre-left, and espoused policies that might be associated with the centre-left such as strong environmentalism and a citizens’ income. However, its tougher line on migration, criticisms of EU leaders and the impact of the euro, and a sympathetic stance towards Russia, have led observers to identify similarities with the League.
Five Star representatives have made sympathetic statements about Russia and President Putin and called for an end to sanctions with Russia.
Five Star has allied with UKIP at the European level, with the two parties forming the Europe of Freedom and Direct Democracy group in the European Parliament in 2014.
Five Star has been highly critical of what it sees as EU-driven austerity policies and a Europe dominated by bankers, and has campaigned for a referendum on Italian membership of the euro. Five Star’s political head Luigi Di Maio said this was no longer party policy in January 2018.
The New Government
After announcing that they had agreed to govern together, the Five Star and League published a “Contract for Government”. This set out a government programme which would entail a more critical approach towards the EU, a tougher approach on migration, and an ‘opening’ to Russia (calling for Russia to be treated as a “partner” rather than a “threat”).
The contract includes a pledge to establish repatriation centres across the country with a capacity sufficient to host all irregular migrants in Italy, with accelerated asylum processes aimed at removing rejected applicants from Italy within 18 months of arrival. The contract also includes proposals for the regulation of Mosques and places of Islamic worship, and pledges to move towards the elimination of Roma camps.
The contract pledges a roll-back of the Monti government’s pension reforms and implementation of both the Five Star’s proposed citizens’ income (for Italian citizens) and the League’s flat tax (a single income tax rate, eliminating higher income tax bands).
A leaked earlier draft of the Contract for Government referred to the need for specific procedures to allow countries to leave the euro. The final published version made no allusion to euro exit. However, it called for a revision of Eurozone governance rules to give greater attention to the wider social and economic impact of policies.
The contract states that the government would oppose aspects of EU international trade treaties being negotiated that (in its view) weaken citizens’ rights and damage fair and sustainable competition. It would also oppose the granting of market economy status to China.
The contract also calls for a revision of the EU Dublin regulation currently providing for asylum seekers to be returned to their first country of entry to the EU, and for a quota system reallocating asylum-seekers across the EU with all states obliged to host them.
The League and Five Star named a relatively unknown law professor who had not stood in the election, Giuseppe Conte, as their Prime Minister designate (a compromise after both Di Maio and Salvini had initially stated that they should lead the government). The government nearly didn’t get off the ground after the Italian President vetoed the coalition’s choice of finance minister, economics professor Paolo Savona.
Savona had previously been highly critical of the euro, calling Italy’s participation in it a “historic error” and describing membership as a “German cage” and suggesting that Italy needed a “plan b” in order to prepare to leave. The President indicated concern that Savona’s appointment would lead to an exit from the euro without this proposition featuring in the parties’ election campaign platforms.
The two parties initially withdrew from the negotiations, blaming Germany and the ratings agencies for interfering in Italian democracy. Over the next few days, Italian bond yields spiked while share prices fell, and a suggestion from a German European Commissioner that the market turbulence would lead to Italian voters turning their back on the populist parties drew anger from the party leaders.
Agreement was eventually reach on a new government with ministers acceptable to the President. This would still involve Savona as Europe minister. Salvini and Di Maio would both be Deputy Prime Ministers, with Salvini also taking on the role of Interior Minister and Di Maio responsible for Labour and Economic Development.
The new government in office
In his inaugural speech to the Italian Senate, Prime Minister Conte called for a reorientation of EU economic policy-making, later confirming that an exit from the euro was not on the agenda. A few days later, new Finance Minister Giovanni Tria said that the “clear and unanimous” position of the government is that there is “no question of leaving the euro.”
Conte’s Senate speech also confirmed Italy’s opening towards Russia, with a call for sanctions to be reviewed. Prior to the G7 summit on 8 June, Conte supported President Trump’s call (rejected by other G7 members) for Russia to be readmitted to the bloc.
In the government’s first few days, Salvini said that the “fun” was over for undocumented migrants, that they needed to get ready to “pack their bags” and that Sicily could no longer be Europe’s refugee camp. However, he said that Italy would be open to refugees genuinely fleeing war. A comment by Salvini that Tunisia was exporting “convicts” to Italy led to the Tunisian foreign ministry calling in the Italian ambassador.
On 10 June, Salvini said Italian ports would be closed to a boat containing 600 migrants, insisting that the Maltese authorities allow the boat to disembark in Malta instead. Spain later offered to take the boat. Salvini claimed this as victory for his new hard-line policy.
Ahead of a meeting of EU leaders on 24 June Conte said Italy would oppose plans that focus on the need to counter movements of asylum-seekers from one EU Member State to another unless there is EU support for Italy in dealing with the number of arrivals to its shores. The new government proposed a new EU system requiring each Member State to take a share of asylum-seekers, and docking EU funds from countries that refuse to do so. At the European Council on 28-29 June, it was reported that Conte had initially blocked the adoption of the Council’s conclusions. However, agreement was eventually reached on a plan which would involve some Member States voluntarily taking asylum-seekers arriving in Italy.
Prior to these meetings, Salvini had indicated that the Italian government would seek to renegotiate its EU budget contribution without a shift in EU migration policy. He also said that Italy would no longer go to EU meetings if “our homework” is “already written by France and Germany.” The new government approach on migration has strained relations with Malta and also led to tensions with France. Following criticism by French President Macron of the Italian approach, Conte accused France of hypocrisy for turning back migrants seeking to enter France from Italy. Salvini has also made a number of disparaging remarks about Macron.
On 19 June, Salvini proposed a census of all Roma present in Italy. Any Roma with irregular status would be expelled from Italy, but those with Italian citizenship would “unfortunately” have to remain in Italy, Salvini said. Di Maio however said that such a census would be unconstitutional. Salvini later said the census was not a priority and that his main goal was to ensure children living there were going to school.
The new Italian government has also indicated that it will ask parliament not to ratify the EU-Canada economic and trade agreement and similar treaties because they provide insufficient protection to Italian food products. On 16 June, Salvini indicated the Italian government would implement a wider protectionist strategy, including blocking boats bringing rice from Asia.
Positions on Brexit
Ahead of the June European Council, Prime Minister Conte said that in relation to the Brexit talks Italy would seek to defend the rights of its citizens in the UK, but was striving for “continuity” both in security policy and in commercial ties. Following the March elections, Salvini said that he wished for “completely open” trade between the UK and EU “without any penalties.” Di Maio said that the British should not be punished for choosing Brexit.
Documents to download
The new Italian Government (770 KB, PDF)
Exchange rates: Data on the value of the pound relative to other major international currencies.
On 3 December the Leader of the House announced the provisional date for the second reading of the Taxation (Post-Transition Period) Bill 2019-21 would be 9 December 2020. To date the Bill has not been published.