Policy towards private enterprise and competition
2017-18: Significant reforms to improve competition are unlikely ahead of the 2018 election.
2019-21: Further improvements in competition policy are dependent on political stability.
Policy towards foreign investment
2017-18: Recent administrative reform has brought about modest reductions in red tape. Some streamlining of the judicial system is likely, but lengthy delays persist.
2019-21: Organised crime, legal complexity and shortcomings in the judicial system remain deterrents, with further reform progress dependent on political stability.
Foreign trade and exchange controls
2017-18: Quotas and tariffs are in line with EU practice. EU-UK trade deal to dominate Brexit negotiations. The risk of euro area break-up, which could lead to capital controls, is moderate, although we expect Greece to have left the bloc by 2021.
2019-21: Trade barriers remain low, but agricultural protection continues. The EU focuses on further bilateral free-trade deals. However, EU-US agreement will probably remain elusive.
2017-18: Despite a tax cut for businesses, levies remain elevated to curb the budget deficit.
2019-21: Overall tax rates stay high, but the burden of future fiscal tightening is likely to fall on public expenditure.
2017-18: Despite new legislation, bank mergers, further recapitalisation and non-performing loan sales are slow. Overall profitability and credit provision are still weak.
2019-21: Banking sector exposure to the Italian sovereign will persist. Mergers of smaller co-operative banks and possible foreign takeovers should accelerate, as will the gradual sale of securitised bad loans.
The labour market
2017-18: Despite reforms, Italy's weak economic recovery will see firms remain reluctant to increase open-ended contract payrolls. Universal unemployment benefit is gradually introduced.
2019-21: Decentralisation of productivity-related pay deals is likely to be slow. Pressure to improve competitiveness leads to more flexible work organisation at company level. Changes to public employment contracts are likely to be resisted.
2017-18: Infrastructure continues to exhibit deficiencies. Lack of political appetite for drastic current-expenditure cuts limits room for public investment.
2019-21: Infrastructure still lags that of other euro area countries, despite some new investment.