Italy's economy barely moves as young workers lose faith

Italy's economic engine is running on fumes. Growth of 0.54 per cent in 2025 ranks among Europe's weakest expansions, leaving the country with little margin to absorb shocks or fund the public services its ageing population demands. Inflation has cooled to 1.53 per cent, but the relief is hollow: wages have not kept pace, and the purchasing power of ordinary Italians continues to erode.

The jobless rate of 6.4 per cent masks a deeper generational fracture. According to France 24, Italy has joined Belgium, Germany, Portugal and Spain in a wave of youth protests centred on living costs, unaffordable housing and employment uncertainty. Young Italians face worse economic prospects than their parents—a reversal that no amount of low inflation can remedy. The Local Italy reported this week that overcrowded classrooms and run-down schools compound the sense that the state has abandoned its young.

The euro has held steady against the dollar over the past month, trading at 1.1267 on 4 November, offering no tailwind from currency depreciation. Italy's government debt remains at 77.3 per cent of GDP, a structural constraint that limits fiscal room to invest in education, infrastructure or job creation. The European Central Bank's benchmark rates and the world's bond markets leave little room for manoeuvre.

The supply side of Italy's economy shows signs of stress. The Local Italy reported that a dry summer has decimated the truffle harvest in Piedmont, one of the country's premium agricultural exports. Cyberattacks on supermarket freezer systems across nine European countries, including Italy, disrupted food supply chains this week. These are small shocks in isolation, but they accumulate in an economy already operating near stall speed.

The contrast with peer economies is stark. While Italy's growth languishes, the euro area as a whole has managed modest expansion. Deutsche Welle reported this week that US technology companies are issuing billions in AI-backed bonds, competing with European governments for capital in volatile bond markets. Italy, saddled with high debt and weak growth, faces higher borrowing costs as a result—a drag that will persist until the economy accelerates.

Youth disaffection is not merely social; it is economic. When young workers see no path to stable employment or home ownership, they migrate or withdraw from the labour market. Italy's population is already ageing and shrinking. Stagnation at 0.54 per cent growth, combined with 6.4 per cent joblessness, risks turning a demographic headwind into an economic reckoning.