Italy’s economy is recovering steadily from the COVID crisis, thanks to the vaccination campaign and generous fiscal support to households and firms. Risks to the outlook are large, including virus variants and the path of global interest rates. To raise growth and employment above pre-pandemic levels, the composition of public spending and taxes must improve. Together with implementation of the National Recovery and Resilience Plan, which includes critical structural reforms and investments, this can help support a faster transition towards a greener, more digitised economy. Realising this will require a demanding set of legislative and administrative reforms. Improving civil justice, tax administration and public investment will be essential to raise income growth. Making more effective use of performance information and spending reviews can help reallocate public spending to the most growth-enhancing activities. Reviewing the existing stock of regulations and how they are enforced would improve the business environment. Agile recruitment and better assessing, rewarding and supporting the performance of public servants would fill growing skill gaps in the public workforce. Improving collaboration across Italy’s multiple layers of government would improve delivery of public services such as childcare and active labour market policies.

SPECIAL FEATURE: STRENGTHENING PUBLIC SECTOR EFFECTIVENESS