The people’s budget? How business interests and fiscal constraints shaped the economic policies of the Italian populist government

Between June 2018 and September 2019, Italy was ruled by a coalition government comprising the far-right League and the anti-establishment Five Star Movement. The government, which was widely referred to as the first populist executive in a major EU member state, alarmed Italian and European elites. In fact, the coalition built its rhetoric on questioning EU legislation, particularly that concerning immigration and, of interest here, fiscal constraints and austerity policies. The executive’s first programmatic document on economic policy, the budgetary plan for 2019, triggered two months of heated negotiations with the European Commission before being approved. Although critical political economists have investigated how the ‘populist’ government furthered neoliberalism in Italy, an analysis of its organic ties with Italian capital is still missing. Our article addresses this gap by investigating, within a critical Global Political Economy perspective, the competing business interests behind the budgetary plan and how they shaped the formulation of the populist government’s economic policies. The analysis of the executive’s economic policies, together with its organic ties with capital, allows us to explain the rise of the populist government and describe its nature as well as its contradictions which explain its limited transformative potential and its inner fragility. The findings highlight the relevance of a critical Global Political Economy perspective for investigating economic and fiscal policy in the era of authoritarian neoliberalism, in particular in assessing the EU structural constraints on economic and fiscal policy but also the agency of domestic capital shaping it.