Economist, former Italian senator, and ex-International Monetary Fund official Carlo Cottarelli spoke to Georgetown students about Italy’s economic hardships on Feb. 18. Cottarelli, who was invited by the Georgetown European Club and United Italian Societies, delivered the firm message that Italy’s finances remain fragile despite the recent upward trend.
Italy’s economy has had a rough three decades, characterized by its currency instability. In the past few years, the 2008 financial crash, economic misfortune brought about by the pandemic, and government corruption have led to volatile economic growth and market uncertainty.
Cottarelli explained that even with some economic recovery and fiscal stability finally taking hold over the last few years, Italy presently isn’t seeing the kind of long-term growth that other European countries have enjoyed in recent years.
Cottarelli traced Italy’s troubles back to 1999, when the country switched from the lira, Italy’s former currency, to the euro. Though he is a supporter of the decision to join the eurozone, he offered one key warning.
“You cannot join and continue to act as if you are still on your own,” Cotarelli said.
Before the euro, Italy could devalue the lira to stay competitive. However, Cotarelli made clear that once that tool was gone and globalization intensified, Italian exporters struggled to keep up.
The late 90s through the 2010s marked the first 20-year period in modern Italian history in which per capita income did not rise.
“Sons and daughters were not better off than their parents,” Cottarelli said.
In Cottarelli’s mind, corruption, tax evasion, and too few large, competitive companies held back economic growth, even as other eurozone exporters moved forward. As such, Italy badly needed foreign stimulus.
“With high public debt, Italy could not spend more to stimulate the economy,” Cottarelli said.
He pointed to how the 2008 financial crisis and the COVID-19 pandemic kept Italy in disarray. Fortunately, in 2020, the European Central Bank conducted the largest purchase of government securities that Europe had seen. Cottarelli joked wryly.
“For two years, the ECB became Italy’s ATM,” he said.
That support drove strong gross domestic product growth in 2021 and 2022, outpacing the European average, but inflation and tighter policy soon slowed growth. Nonetheless, Cottarelli praised recent fiscal decisions that have signaled a commitment to market stability, especially under Italy’s nationalist Prime Minister Giorgia Meloni.
“Meloni is quite prudent and cautious when it comes to fiscal accounts for ideological reasons,” Cotarelli said. “A true nationalist must know if you want to be independent from abroad, you must have some fiscal accounts.”
To show why Italy still lags behind many European powers, Cottarelli contrasted it with Spain, who sports lower tax rates, less bureaucracy, faster courts, cheaper renewable energy, and a stronger labor outlook. Cotarelli noted that Italy, by contrast, loses roughly 30,000 young people a year to emigration.
For Italian attendees, Cottarelli’s message hit close to home.
“Italy needs drastic reformulation of bureaucratic and judicial structures, and investment allocation towards innovation in an accountable way,” Federico Logroscino (MSB ’27) a double citizen of the U.S. and Italy, and a member of United Italian Societies said.
Claudia Bertoluzzo (SFS ’27), who was born in Milan, remarked that Cottarelli’s comments on Italian youth’s exodus resonated with her.
“In Italy, there is a huge gap between our strong education system and how that translates to innovation,” she said.
Bertoluzzo added that it is very hard to see a future when salaries and career growth stagnate at home.
Cottarelli concluded by warning the audience that while Italy might appear stable, it is still at risk of falling behind. For the Hoyas studying finance, international relations, or European affairs, his remarks framed stability as only the starting line, not the finish.
“Stability is not a sufficient condition for growth,” Cottarelli said.
