Economic Crisis and Recentralization of Government: the Italian Experience

The simplest way to describe the situation of local public finance in Italy, in the mid of the worst recession and financial crisis the country has experienced since the end of the Second World War, is by using the expression “war economy”. In the attempt of restoring public finances and re-gaining markets confidence, the late Berlusconi government and particularly the new “technical” government by Mario Monti, formed in November 2011, launched a massive fiscal adjustment program, meant to reduce public deficit and debt and improve the efficiency of the public sector. Necessarily, this program had to affect local governments too, as in Italy regions and lower levels of government control large part of public expenditure. But in so doing the government took a number of actions versus local governments that could only have been possible in a perceived situation of extreme risk for the country, analogous to that of an international conflict.