Europe is finding itself more fragile in the face of the new US protectionist wave. The President of the European Central Bank Christine Lagarde, speaking in Geneva, confirmed that the eurozone economy, after a first quarter 2025 of robust growth, slowed down in the second quarter, which is set to consolidate in the following months. Weighing on this is the new trade scenario with the US: the tariff rates agreed with the Trump administration are higher than expected and will force the ECB to revise its September estimates downwards.

The flare-up of European exports to the US market, which accelerated in recent months in anticipation of duties, is already behind us. Now the Eurozone is entering a braking phase, and for Italy the problem is even more acute: a country that exports a lot, but grows little and badly, risks paying a double price.

The moves of the Meloni government and their limitations

In this context, Italy’s economic policy shows lights and shadows. In recent months, the Meloni government has introduced potentially useful instruments, from the 20 per cent IRES bonus for those who reinvest profits, to the Transition 5.0 Plan to encourage digitalisation and energy efficiency in companies, to the ZES Unica Sud to attract capital to the south of Italy. Added to these measures are the reform of the three-rate IRPEF and greater flexibility in fixed-term contracts. These are positive signs, which try to shift the centre of gravity from the drugs of generalised bonuses to more targeted incentives for productivity and innovation.

Yet this is not enough. It makes no sense for companies to demand public restitution and compensation for duties: drugs and warm nappies are dying. In a world marked by trade barriers, the only antidote is to make the economic system stronger from within. This means liberalising domestic markets and pushing innovation. As long as Italy continues to protect corporations and rents, it will lag behind.

The Meloni government, like many executives of the past, appears to be held back by the illusion of the immediate consensus of this or that category. We have seen it on taxis, on beach concessions, on local utilities: no decisive steps, only micro-corrections and a few shrimp steps.History tells us that corporate protection gives ephemeral consensus and zero growth. Without true liberalisation, investments will remain choked by structural inefficiencies and companies will not be able to compete in international markets.

Start-ups, human capital and the challenge of competitiveness

Alongside domestic market reforms, there is the decisive chapter of start-ups and human capital. Italy has a promising ecosystem of new technology companies, but it is still too small, with complicated procedures and insufficient capital. We need a regulatory and fiscal environment that truly rewards the growth and scalability of innovative companies, attracting venture capital investment. And we need to open the country to the arrival of skilled workers from abroad: in a nation that will lose millions of employees in the coming decades due to population decline, attracting skills becomes an integral part of the survival strategy.

Italy cannot respond to tariffs with the reflection of subsidies or closures. It must respond with more competition, more economic freedom, more innovation. The message coming from Lagarde is clear: monetary policy can buffer, but growth is played on reforms. Liberalisation and innovation are not an ideological fad: they are the only way to save the country from an announced decline.