Italy's Economy Is Stable on Paper. Milan's Streets Tell Another Story.

The figures in front of us describe an economy that is, by the standards of the past decade, behaving itself. GDP growth of 0.54% for 2025 is modest but positive. Inflation at 1.53% sits close to the European Central Bank's target. Unemployment at 6.39% is low by Italy's recent history. On paper, this is a country that has found its footing.

The streets of Milan this weekend tell a different story. According to the Guardian, protests over housing and living costs that have convulsed Spain and France in recent weeks have spilled into Italy, with rioters clashing with police and setting property on fire in Milan. Le Monde reported a second day of street clashes, and Prime Minister Giorgia Meloni called a security meeting for Monday. The Guardian also quoted her saying the march was exploited by 'hooligans'.

The gap between the two accounts is the story. A growth rate of half a percentage point is not a recovery; it is a stall that avoids contraction. Inflation near 1.5% is low in absolute terms, but it follows years of price increases that have not been reversed. Wages have not kept pace. For a household in Milan, the cost of rent and daily life has risen faster than the official inflation rate suggests, because housing is weighted differently in a city where demand from tourism and remote workers has reshaped the market.

Unemployment at 6.39% is a national average that conceals sharp regional variation. The North-South divide remains the defining feature of the Italian labour market: Milan's problem is not joblessness but the cost of living for those who have work. The protests are not a demand for jobs; they are a demand for affordable housing in a city that has become a showcase for mass tourism and short-term rentals.

The euro's recent movement adds a layer. EUR/USD has fallen from 1.146 on 18 September to 1.1253 on 16 October, a depreciation of roughly 1.8% in a month. A weaker euro makes Italian exports more competitive, which helps manufacturers in the North. But it also raises the cost of imports, including energy, which feeds through to household bills. The exchange rate is not the cause of the protests, but it is part of the backdrop of squeezed purchasing power.

The government's response so far has been framed around public order. That is understandable, but it does not address the underlying arithmetic. Italy's public debt, at 77.3% of GDP in the 1992 data point given here, is not the immediate constraint it was during the sovereign debt crisis — the figure has risen and fallen since — but it limits the fiscal room for any large-scale housing intervention. The European Central Bank sets interest rates for the eurozone as a whole, and Italy's borrowing costs remain sensitive to political risk.

What the foreign coverage captures is a pattern that is not unique to Italy. The Guardian reported similar protests in Lisbon, with a tent encampment demanding action. Spain and France have seen their own convulsions. The common thread is not Italian exceptionalism but a European one: the cost of housing has outrun wages in the cities that drive growth, and the political system has been slow to respond. Italy's macro numbers may be calmer than its neighbours', but the pressure is the same.

The test for the Italian government is whether it can separate the legitimate grievance from the violence and respond to the first without overreacting to the second. The data give it room to act: inflation is low, growth is positive, and the ECB's rate path is more predictable than it was a year ago. But the data also set a trap: a government that points to 0.54% growth and 1.53% inflation as evidence that all is well will find that Milan's streets are a more persuasive indicator than any statistical release.