Italy's Growth Is Not Enough to Calm the Streets

The images from Milan this weekend — shuttered luxury boutiques, looted storefronts, and the imminent deployment of troops — are not the usual postcard of Italy's economic capital. According to the Guardian, demonstrations over poor public services and rising costs spiralled into violence, prompting the government to plan a security crackdown. The BBC reported that the measures follow protests over rising costs that broke out into clashes. For an economy that is officially growing, the unrest is a jarring contrast.

The headline numbers suggest a country on an even keel. GDP is forecast to expand by 0.54% in 2025, according to the World Bank, while inflation sits at 1.53% and unemployment at 6.39%. On paper, that is a stable picture: prices are rising slowly, and the jobless rate is well below the double-digit levels that marked the aftermath of the sovereign debt crisis. But the protests reveal a different reality — one in which the aggregate figures mask the pressure on wages, housing, and public services that ordinary Italians feel daily.

The gap between the statistical recovery and the lived experience is not unique to Italy. Across Europe, from France to Spain and Portugal, similar protests have erupted over the cost of living and housing, as the Guardian noted in its coverage of the spread of unrest. The New York Times reported parallel demonstrations in Italy's north and south: young people in northern cities rioted, while farmers and truckers in the south stopped commercial traffic over high gas prices. The common thread is a sense that the recovery, however modest, has not reached household budgets.

Italy's labour market offers a clue. The 6.39% unemployment rate is low by the country's recent standards, but it conceals persistent issues: youth unemployment remains high, and many of the new jobs are temporary or poorly paid. The protests in Milan were driven in part by young people, according to the Guardian, who face precarious work and soaring rents. The luxury shops that closed their doors are a symbol of an economy that serves tourists and the wealthy, while many residents struggle with the basics.

Fiscal policy is constrained. The government's debt-to-GDP ratio, while not given for the current year in the data, has historically been among the highest in the eurozone — the 1992 figure of 77.3% is a relic of an earlier era, but the upward trend since then is well known. With the European Central Bank's reference rates shaping borrowing costs, Rome has limited room to spend its way out of discontent. The euro's recent depreciation against the dollar — from 1.146 on 18 September to 1.1225 on 19 October — offers a modest tailwind for exporters but does little for households facing higher import prices.

The political response is already taking shape. The BBC reported that the government plans tougher security measures, and the Guardian noted that Prime Minister Giorgia Meloni blamed 'hooligans' for exploiting the march. But a security crackdown addresses symptoms, not causes. The underlying economic grievance — that public services are deteriorating and costs are rising faster than wages — requires a fiscal and structural response that Italy's fiscal position makes difficult.

For the European Union, the unrest in Italy is a reminder that the recovery from the pandemic and the energy crisis has been uneven. The European Commission's forecasts for Italy have repeatedly hinged on investment and reforms tied to the EU's recovery fund, but the disbursement of those funds is contingent on milestones that take time. In the meantime, the streets of Milan are a warning that growth, however welcome, is not the same as prosperity.

The coming months will test whether the government can translate its security measures into a broader economic agenda. The EU is eyeing Rome for a 2027 summit ahead of the Italian election, according to Politico Europe, which would give the Prime Minister a high-profile stage. But the domestic audience is less interested in summits than in the price of gas, the availability of affordable housing, and the quality of public services. Until those improve, the gap between the statistics and the streets will remain.