Further Development of the Italian Economy

Abstract

The economic miracle in Italy collapsed in 1963. Briefly the causes for this were the substantial wage increases in 1962; these were followed in 1963 by an increase in imports of 25 per cent, consumer prices rising by 8 per cent. The development of the home market, which had earlier been a source of strength, now diverted goods from the export trade. The crisis of confidence among the industrialists was accentuated by the actions and plans of the new Left-Centre Government, by what Nenni, who was second-in-command in Moro’s first administration, called programmazione. It has been seen that this government took office in December 1963 and large sums of money were promptly exported by hostile financiers and businessmen. Thus in 1964 Moro and his colleagues found themselves with the need to restrict credit instead of investing generously in planned reforms. On 23 February a ministerial decree cut down hire-purchase, raised the price of petrol and increased the taxes on larger cars and motor-yachts. On 14 March an American loan of $1,225 million, which included credits from the International Monetary Fund, was announced.