Bringing Domestic Preferences Back Into the Budget: The Politics of Fiscal Consolidation in Italy (1992-1998)

This paper argues that the content of Italy’s fiscal consolidation in the 1990s has been largely influenced by domestic socio-political coalitions. Namely, the preference over either spending cuts or revenue increases, at the macrolevel, and more so, at the micro-level, the preference over specific spending and revenue items have been affected by socio-economic interests and by partisan Government actors. Here, the colour of Government matters to the extent in which it facilitates or hinders interest groups’ access to policymaking, thereby determining their actual political power. The issue of the composition of fiscal consolidation contributes to a better understanding of Italy’s significant adjustment. Paradoxically, fiscal austerity has allowed, in a country such as Italy, a more legitimate redistribution of public resources and hence guaranteed their 'social embeddness' (and legitimacy)