The black holes in Schlein’s agenda. Dear programme, how much are you costing us?

It is clear where the broad coalition wants to go: but how does it intend to get there? On Saturday, Il Foglio summarised the Democratic Party’s programme from the speech given by Elly Schlein to the party leadership on 2 October. The PD is the largest party in the coalition – accounting for roughly half of its votes – and the one with the richest history, legacy and experience of government. If the elections produce a favourable outcome for the centre-left, it will be the party to which all stakeholders look for a bastion of reliability. Reconstructing the PD’s economic policy is therefore essential to understanding what lies ahead. The speech reveals a plan that is, on the whole, coherent. For the PD, the key to the country’s recovery lies in the extensive use of public intervention across all sectors, from energy to employment, from industrial policy to welfare. Although rhetorically powerful, the secretary’s words do not, however, go into detail. In particular, they leave two aspects in the shadows: the effects of the PD’s economic policy on the public budget and its practical consequences. It is here, in fact, that problems and contradictions arise: taken at face value, the ‘Nazareno’ pledges require a massive increase in public spending, amounting to several percentage points of GDP, which can only be met either by flouting the European Stability Pact or by indiscriminately raising taxes. And, of course, the first option is not without consequences, given that there would be an immediate reaction in government bond yields and on the financial markets. Moreover, many of the proposals, though seemingly well-conceived, conflict with one another once applied to reality, as in the energy sector. These aspects must be highlighted in order to separate promises from rhetoric: while no one realistically expects a politician to implement everything they announce, there must be a connection between what is put on the table during the election campaign and what will then have to be delivered, if elected. The greater the gap, the less credible the programme is and, consequently, the less persuasive the political offering. Voters may accept a degree of exaggeration, but they rarely allow themselves to be taken for a ride.

It is therefore time to try to summarise the substance of the programme and scrutinise the PD’s finances. Since Schlein’s speech revives many proposals that the PD has brought before Parliament in recent years, it seems logical to use these, along with the relevant technical reports and materials published by the party’s economic experts – starting with the head of economic affairs, Antonio Misiani, and the head of industrial policy, Andrea Orlando – to consider their practical implications: how much they cost and what they entail. A word of caution: for reasons of space, we will not be able to focus on all 105 points into which the programme – as filtered by Il Foglio’s AI – is divided. We will concentrate on those which, in our view, represent the cornerstones of the Nazareno’s plan for the country.

Energy is the hot topic of the moment, and this is where we must begin. The programme essentially boils down to three points: more renewables; decoupling electricity and gas prices by applying the Iberian ‘price cap’; and the abolition of environmentally harmful subsidies (Sad). Other proposals, such as the revival of the ‘Acquirente Unico’ scheme, the partial reversal of energy market liberalisation and the ‘price cap’ on fuels, are to some extent ancillary to those just mentioned. Although on the surface these may appear sound and in line with the European approach to energy and climate issues, in reality they conceal more contradictions than meets the eye. 

First of all, when discussing energy, the PD refers almost exclusively to electricity, which meets around 23 per cent of our total energy requirements: it says very little about the remaining 77 per cent, apart from a general call for the electrification of consumption (largely through the strengthening of existing incentives). The focus on renewables, therefore, takes on even greater significance, because in effect the PD is proposing these sources not only to meet the demand for electricity but – precisely through electrification – to replace fossil fuels in other applications, including domestic heating (with heat pumps), private transport (with electric cars) and industrial processes. By setting the bar so high for renewables, however, the PD stumbles over an obstacle: itself. Indeed, whilst at national level it makes renewable energy a defining feature of its identity, at local level the story is quite different. It is primarily the ‘progressive’ regions that are lagging behind in the transition: according to Terna’s latest report, covering September 2026, there is a shortfall of 694 MW of new capacity in Sardinia, 319 in Puglia, 305 in Tuscany and 202 in Umbria. The country as a whole is on track to meet the targets set in the Pniec for 2030 for renewable electricity (+621 MW), despite the negative contribution from regions governed by the centre-left (-1,416 MW).

For Schlein, the way forward is “not to impose solutions from above, but to seek to share these decisions with local areas and communities, immediately redistributing the benefits of that plant to the communities through discounts on energy bills and allocating a share of the energy produced straight away to small and medium-sized enterprises in that area”. However, this approach amounts to eroding the benefits of green energy sources, to the advantage of residents in the areas where they are installed and to the detriment of everyone else. The PD is responding with two measures: the first is the ‘social bill’, borrowed from its AVS allies, which we will discuss later. The other is a review of the rules governing the functioning of the electricity market (which apply across Europe and are laid down by EU regulations). In particular, the PD proposes to ‘decouple the price of electricity from that of gas as much as possible’. It has often translated this slogan into a call for the Iberian ‘tope’, following the example of Pedro Sánchez. But the Iberian exception is precisely the mechanism underpinning the bill decree that is expected to receive the go-ahead from the Council of Ministers today: for the sake of consistency, will the PD support it?

There is also another inconsistency: the PD, in its public statements as well as in the various bills or amendments tabled in Parliament, calls for the gradual phasing out of environmentally harmful subsidies (SAD). SADs are reported annually in a catalogue published by the Ministry of the Environment and correspond to cash transfers or tax relief measures that have the effect of encouraging energy consumption, the use of fossil fuels or other behaviour that is potentially harmful to the environment. However, when the government abolished what was at the time the largest EHS (the different tax treatment of petrol and diesel, which has fallen from 3.4 billion annually in 2021 to 2.5 billion in 2025 and, probably, to around zero in 2026) the Democrats took a stand against it and launched a campaign against Giorgia Meloni, accusing her of ‘raising excise duties’.

In short, when it comes to energy, the PD wants renewables but is hindering them in the regions; it wants lower energy bills but supports subsidies that drive them up; it calls for the abolition of SADs but proposes new ones. It is not clear whether it wants one thing or its opposite.

The other major issue is income trends. The main measures the PD intends to use to tackle this are the statutory minimum wage and a reduction in working hours whilst maintaining the same level of pay.

Italy is one of the few European countries without a minimum wage, as, like the Nordic social democracies, it relies on collective bargaining. In itself, this is a well-established and familiar mechanism, with its pros and cons. In countries with a stronger tradition of collective bargaining, its management (including the setting of the minimum wage level) is entrusted to technical bodies independent of politics. The relevant European directive itself recommends setting it at around 60 per cent of the median wage. A recent study by Salvatore Lo Bello and Lorenzo Pesaresi for the Bank of Italy shows that a minimum wage that is too high not only risks reducing employment among the most vulnerable groups (or driving some of them into the informal economy), but also favours larger firms. These firms are better able to absorb the impact and can subsequently pass on the cost to consumers through price increases: this is why the minimum wage works well if it covers no more than 10 per cent of the workforce.

The PD’s proposal completely disregards all the caveats and jumps straight to the conclusion, at the risk of proving detrimental to Italy’s productive fabric, particularly in the most vulnerable sectors (small service businesses) and in the least dynamic regions (the South). Instead of devising a rigorous method for determining the statutory minimum wage (as has been done in Germany or the United Kingdom), the Democrats started with the figure itself, turning it into a propaganda tool: the proposal, dating back to 2022, was to set a minimum rate of 9 euros per hour. When it was proposed, the €9 threshold was well above the level recommended by the EU (60 per cent of the median wage), as it represented around 75 per cent of the national median wage and as much as 90 per cent of the median wage in the South: the highest level among all developed countries. According to INPS, this situation affects at least two million workers in the private sector, accounting for around 13 per cent of the total. A more detailed analysis carried out by ISTAT – though relating only to firms with at least 10 employees – reveals that the percentage is particularly high among certain categories of workers: women (12.2 per cent), young people (23.6 per cent), employees with less than a secondary school qualification (18 per cent), those working in the retail and services sectors (17.5 per cent) and in unskilled occupations (33.3 per cent). It is in these areas that the impact of a minimum wage set not through codified procedures, but on the basis of a race to propose the highest figure, could be most destabilising. In recent weeks, it appears that the proposal from the broad coalition – following years of inflation – is to raise the old threshold from 9 to 10 euros an hour, thereby exacerbating the problems we have discussed.

Whilst the minimum wage may have knock-on effects at the lower end of the income distribution, the effects of Schlein’s other proposal – a reduction in working hours whilst maintaining the same pay – could be more widespread. The idea is to cut working hours from the current maximum of 40 per week to 32 (eight hours), whilst maintaining the same pay: this corresponds to an average increase in the hourly wage of around 20 per cent. An unthinkable leap for a country that has seen stagnant productivity and wages for thirty years. Proponents argue that the measure would pay for itself through productivity gains; yet, if this were the case, one might ask why businesses are not already adopting it voluntarily. Even centre-left representatives are aware of this, which is why the draft bill signed by the leaders of the coalition parties (Fratoianni, Bonelli, Conte and Schlein) provides for generous incentives: employers who reduce working hours will be entitled to a reduction in their social security contributions ranging from 30 to 60 per cent, depending on the size of the business and the ‘demanding nature’ of the work carried out.

Such a measure, however, would entail disproportionate costs. In the broad coalition’s proposal, the leaders believe they can get away with 600 million in incentives. The State General Accounting Office (RGS), which has the institutional task of assessing the costs of draft legislation and the related funding to safeguard the budget, is strongly opposed to this. According to the RGS, the cost of the proposal in terms of reduced contribution revenue amounts to 24 billion 800 million euros over the three-year period: more than 40 times as much. The RGS explains how this estimate is arrived at: out of a total workforce of 10 million, it is assumed that 30 per cent of workers will be affected and will benefit from an average reduction in social security contributions of 40 per cent. Once again, the PD’s proposal suffers from a fundamental contradiction: if reducing working hours whilst maintaining the same wage automatically leads to productivity gains, there is no need for such generous incentives; if, on the other hand, such high subsidies are envisaged, then this means that, in addition to the lack of productivity gains, there is also a funding shortfall (over 24 billion euros, or more than one percentage point of GDP).

“We need an industrial policy” is the phrase most frequently used by politicians across the political spectrum. The PD interprets this as follows: “Strategic missions for publicly owned companies. Assigning guidelines to large publicly owned companies that are consistent with the priorities of industrial policy. It must be policy that defines the strategic direction of public enterprises, not the other way round”. In essence, using large publicly owned companies – even, and perhaps especially, when they operate in competitive markets such as energy or telecommunications – as extensions of the state.

State-owned enterprises have played a significant part in shaping our country’s history, but over time they have revealed all their limitations. The politicisation of corporate strategies has led to them being used as a tool to rescue failing businesses, tying up capital and labour in unproductive activities. For this reason, in Italy as abroad, the situation has changed since the 1990s, and state-owned enterprises have largely been privatised or, at any rate, treated as if they were private. Turning back is economically damaging and politically dangerous. Economically speaking, treating state-owned enterprises as an arm of the state creates dangerous confusion regarding their mandate and governance: on the one hand, turning them once again into a tool for bailouts (a temptation that has never entirely faded, as demonstrated by the cases of Invitalia and Cassa Depositi e Prestiti); on the other, ruling out the possibility of selecting other, potentially more efficient companies to carry out the ‘missions’ assigned by the government’s industrial policy. Indeed, removing the inevitable competitive pressure harms the public enterprises themselves. But above all, this is incompatible with the rules underpinning the functioning of the European Union, which, in order to promote economic integration, requires equal treatment between public and private companies and between domestic and foreign firms. In other words, directly assigning tasks and functions to publicly owned companies solely by virtue of their shareholding structure would constitute a flagrant violation of European rules and would call into question the very premise of the Union.

This does not mean there is no scope for industrial policy: indeed, in recent years we have witnessed its powerful resurgence, evident, for example, in the EU’s entire green strategy. It is simply that industrial policy takes the form of targets, incentives, penalties and other ‘neutral’ instruments with regard to businesses: it does not involve a direct relationship between the state as a shareholder and the companies in which it holds a stake.

There is also another rather vague aspect of the PD’s proposal: “Channelling savings into the real economy. Directing a portion of the 1,700 billion euros held in Italians’ current accounts towards productive investments, particularly in innovation within small and medium-sized enterprises”. It is unclear what this might mean: perhaps the PD intends to impose a compulsory levy on current accounts or force savers (or their pension funds) to channel a portion of their resources towards companies selected by politicians? Setting aside all the formal and legal problems such a proposal might encounter, if the idea were to take hold that the main governing party wants to get its hands on people’s savings, the first and obvious reaction of a large number of savers would be to rush to the bank counters and move their deposits abroad (or under the mattress).

Here, Elly Schlein’s programme is characterised by a strengthening of the welfare state. The most ambitious proposal concerns the expansion of the National Health Service, increasing spending to 7 per cent of GDP. In previous years, the PD secretary had tabled a bill to raise this figure to as much as 7.5 per cent: the initiative was very costly, as it envisaged an increase in expenditure of 31.6 billion annually once fully implemented, and lacked the necessary funding. She has now scaled back the ambition, setting a target of 7 per cent of GDP, but has made no progress on the means to achieve it: the funding is still lacking. Healthcare expenditure currently stands at 6.4 per cent of GDP, meaning that an additional 14.5 billion euros is needed to reach the target.

The same applies to pensions, the largest item of social expenditure and public spending in general. The PD is calling for the reinstatement of ‘Opzione donna’, the early retirement scheme reserved for women, which, all things considered, has a modest cost (400 million), and for the introduction of a guaranteed pension for young people, the cost of which is undefined and depends on how it is designed. But the most worrying aspect is the idea of undermining the pillars that prop up the pension system. The PD, in agreement with all parties in the broad coalition, has tabled a motion calling for a definitive and permanent freeze on the adjustment of pension eligibility requirements in line with life expectancy. According to estimates by the Catholic University’s Observatory on Public Accounts, the immediate cost of the measure is 4.7 billion, but in the long term it would increase pension expenditure by 1.16 percentage points of GDP. According to the UPB, however, abolishing the automatic adjustment would lead to an increase in public debt of around 7 percentage points by 2031 and 20 percentage points by 2041. More recently, representatives of the ‘Nazareno’ coalition have described the updating of the transformation coefficients for the contribution-based pension balance as ‘theft’. These instruments are the two automatic mechanisms – in force since well before the Fornero reform – which ensure the sustainability of the pension system in line with demographic trends and keep the already shaky ‘intergenerational pact’ afloat. The principle is that if people live longer, the system adjusts to remain sustainable. Calling for an exemption from them, or even their complete abolition, means going beyond Salvini’s agenda: not simply ‘scrapping the Fornero law’ but also the Dini reform.

Schlein’s wish list is not yet complete. Her programme includes increased funding for schools, universities and research (school buildings, higher teachers’ salaries, full-time recruitment, and permanent contracts for researchers), for security (increasing police numbers), for housing (a rent fund and social housing) and, above all, for the tax system. In this area, Schlein wants to introduce a number of bonuses and incentives. These include, for example, the extension of equal parental leave, with 100 per cent pay for five months, at a cost of 3 billion euros. Or the ‘right to stay’ law, which consists of a €200-a-month bonus for three years for young workers on permanent contracts, at a cost of around €1 billion. Among the proposals put forward is a €70 increase in the universal child allowance for families with an ISEE below €25,000, costing €5.4 billion. There is no shortage of reforms on the personal income tax (IRPEF) front. The first is the neutralisation of the tax drag, through the indexation of tax bands to inflation, which costs €3.2 billion (based on a 2 per cent rise in prices, but increasing as inflation rises). The second is the extension of the ‘no-tax zone’ up to an income of 15,000 euros, with a phased extension up to 60,000 euros, at a cost of 4 billion.

This list does not, of course, include the proposals from allied parties, which will be incorporated into the coalition’s programme. The M5S’s ‘Reddito di cittadinanza 2.0’ will certainly be included, aiming to restore at least the 2 billion cut by the Meloni government; however, Giuseppe Conte has drawn from ‘Nova’ other spending proposals that are significantly higher (the economist Riccardo Trezzi, writing in Il Foglio on 25 September, estimated an annual cost of 120 billion https://www.ilfoglio.it/politica/2026/09/25/news/nova-il-programma-del-m5s-e-la-cara-vecchia-spesa-in-deficit–408621). The ‘Start tax’ proposed by Matteo Renzi – namely, halving personal income tax for young people, at a cost of at least 4 billion – should be included, as the coalition had already adopted it a year ago. The package will inevitably include some measures from the AVS, such as the ‘social utility bill’ proposed by Angelo Bonelli, which consists of a 2,000 kWh bonus for households with an ISEE of up to 30,000 euros, costing at least 5 billion.

The question to ask, therefore, is what sort of budgetary policy a future Schlein government (or any progressive government in which the PD holds a majority stake) intends to pursue. Italy has the highest public debt in Europe at 138 per cent and a deficit that is expected to fall to 2.9 per cent this year, bringing the country out of the infringement procedure in 2027, given that debt is forecast to remain below 3 per cent in the following two years as well (net of the safeguard clause for energy and defence). To meet these targets, Giorgia Meloni and Giancarlo Giorgetti have agreed on a multi-year fiscal consolidation path with the EU, which envisages an improvement in the primary surplus of 1.5 percentage points over two years, from 0.9 per cent in 2027 to 2.4 per cent in 2029. The PD’s programme, which envisages tens and tens of billions in increased expenditure and reduced revenue (at least 2 percentage points of GDP in additional deficit), is obviously incompatible with this fiscal adjustment. Does this mean that, in its first Budget Bill, the Schlein government will breach the Stability Pact?

The problem is not so much a clash with the European Commission’s officials – who, at most, can place Italy under infringement proceedings the year after having lifted them – but with investors in the markets: their punishment is not slow and bureaucratic, but financial and immediate. And it can be very painful. If the memory of what happened to Italy in 2011, and then in 2018, is fading, one need only look at what has been happening in France in recent months.

For these reasons, the budgetary policy is the most worrying aspect of the PD’s programme. For whilst we have seen that many proposals within the individual policy chapters are contradictory, taken together they show that the programme as a whole would set the country on a fiscal trajectory incompatible with reality. The fundamental question that should therefore be put to Schlein and her colleagues is no longer simply ‘should we supply arms to Ukraine or not?’. But above all: a primary surplus – yes or no? And at what level?