Silvio Berlusconi's comeback won't fix the Italian economy

Why these Italians moved to London
Why these Italians moved to London

He's back!

Silvio Berlusconi, the controversial media tycoon and former prime minister of Italy, has emerged as a potential kingmaker in a crucial general election to be held Sunday.

Analysts have watched the resurrection of the self-described "Jesus Christ of politics" with trepidation. They worry that policies proposed by his coalition would blow the country's budget deficit wide open and damage its weak economy.

Berlusconi is not allowed to hold office because of a fraud conviction. But he could anoint the next prime minister if his alliance of center-right parties wins the largest share of the vote.

Once in power, his allies are promising to spend, spend, spend.

"[The] coalition has proposed a raft of sweeping policies that would cause a blowout in the budget deficit and possibly a significant shrinking of the workforce," said Jack Allen, an economist at Capital Economics.

Sound familiar? Berlusconi dominated Italian politics for decades, serving as prime minister between 2001 and 2006 and again from 2008 to 2011. He left office under the shadow of sex scandals and a debt crisis.

Productivity, incomes and living standards all stagnated under his watch.

"During the 2000s Italy recorded the lowest growth rate in the world," said Andrea Capussela, an independent economist. "It was a bad decade for just about everybody."

Silvio Berlusconi Italy

Berlusconi has convinced some voters that Italy's economic misery is not his fault. He blames unreliable coalition partners, the Italian elite and even an international conspiracy.

"A considerable portion of the Italian electorate believe that he wasn't able to do all he promised because he was not allowed to," said Fabio Bordignon, a political scientist at the University of Urbino.

Related: Italy's economy is still stuck in 1st gear

Berlusconi resigned in late 2011 during Europe's debt crisis as fears mounted that investors could refuse to buy Italian government bonds, pushing the economy into default and wrecking the euro.

The governments that followed adopted reform measures designed to avoid another debt crisis. Unemployment went down and the national debt stabilized.

But the recovery has been slow, and many Italians have not felt its benefits.

"The consequences of the crisis are still strong, especially in terms of unemployment, and so it seems that the parties of the outgoing government are not going to capitalize on the improvement," Bordignon said.

Berlusconi and his allies present an alternative. He has pledged to cut taxes, raise pensions, increase infrastructure spending and boost welfare payments.

Nicola Nobile, an economist at Oxford Economics, said the policies amount to a sugar rush.

"If enacted, some of these measures would potentially double Italy's growth next year at the expense of a dramatic deterioration in the fiscal deficit," she said.

More debt would rattle investors, but that's not a concern shared by supporters of Berlusconi. Instead, they see him as a stable political force in a county that has had 64 governments in 70 years.

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