chapter  19
22 Pages

The economy and society, 1980–2006

By 1980 there were signs that the long years of economic andsocial crisis were coming to an end. Pirelli, for example, made a small profit that year, the first for ten years; Olivetti turned, just in time, to computers and word-processors. As the European recession ended in 1983-84, Northern Italy embarked on a period of rapid growth and very considerable prosperity. The Italian economy imported raw materials and exported much of its manufactures. Cheaper commodity prices – especially the falling oil price after 1986, a 1970s-style ‘oil shock’ in reverse – were therefore a huge stimulus. Manufacturing increased by 7.5 per cent p.a. between 1986 and 1991; inflation, over 20 per cent in 1980, still 14.6 per cent in 1983, after 1986 was at a mere 5-6 per cent p.a.; balance of payments problems disappeared; even the lira was fairly steady, having joined the European Monetary System in 1979. It was Italy’s traditional areas of strength – engineering, furniture, ceramics, footwear and clothing, office machinery – that flourished most, helped by more clandestine and even more profitable activities like arms sales to the Middle East and a virtual Sicilian monopoly of the heroin trade. Even on official figures, Italy had become the world’s fifth industrial power. Her GDP overtook Britain’s by 1987; per capita income was $15,120 by 1989, compared with Britain’s $14,610 (and the USA’s $20,630). And there was a real consumer boom at home. Economists wrote of Italy’s ‘second economic miracle’ – achieved, moreover, without any indigenous coal or oil.