Meloni's Italy: Rising Business Confidence, Moody's Upgrade, and Bold US Alliance

Italian Prime Minister Giorgia Meloni has charted a different economic and political course compared to her European Union counterparts. Her approach led to a rise in consumer confidence, a Moody's upgrade, and stronger ties with Washington.

In May 2025, the Italian consumer confidence index rose from 92.7 to 96.5, supported by the economic climate index, which increased from 89.6 to 97.5. The county's business confidence climate index increased from 91.6 to 93.1, the National Institute of Statistics (Istat) said on Thursday.

Manufacturing confidence grew from 85.8 to 86.5. In particular, both assessments on order books and expectations on future production improved, the statistics office said.

Italy's economy, however, has struggled to expand, with annual GDP growth in the first quarter at 0.7%, as published by Istat today. GDP will grow 0.7% in 2026, making it one of the slowest of Europe's large economies.

Europe's fourth-largest economy has high public debt, productivity stagnation, and labor and demographic challenges. According to Istat, 367,000 young people aged 25-34 left Italy between 2014 and 2023, with 146,000 of those being university graduates.

Young Italians cited a lack of employment opportunities and economic mobility as significant factors. Around 25% of Italians are aged 65 or older, while the number of Italians over 80 has surpassed the number of children under 10 for the first time.

Meloni's Fiscal Performance Spurs Moody's Upgrade

Despite the country's economic problems, Moody's upgraded its outlook on Italy to "positive" from "stable" on May 23. It cited increased confidence in the country's fiscal and political trajectory.

The credit rating agency pointed to a stronger-than-expected fiscal performance in the previous year and a stable political environment that supports the government's economic plans. Moody's maintained Italy's credit rating at "Baa3," one notch above junk status.

"The decision to change the outlook to stable from negative reflects a stabilization of prospects for the country's economic strength, the health of its banking sector and the government's debt dynamics," Moody's said in a statement.

Moody's latest move "is the result of the serious and silent work that we have been carrying out since the beginning of the government," Finance Minister Giancarlo Giorgetti said in a statement. "This result benefits families, businesses and even Italian banks."

The Italian 10-year bond yield declined to 3.6% on May 23, approximately 40 basis points lower than levels seen on April 9, 2025. The spread between Italian BTPs and German Bunds closed just above 100 basis points, indicating a phase of relative stability for Italian debt.

Italy Emerges As European Ally of Trump Administration

The 48-year-old leader has emerged as an ally of US President Donald Trump and tech billionaire Elon Musk. Meloni, for example, flew to Florida to meet Trump at his Mar-a-Lago retreat two weeks before the inauguration.

She also met with Trump in Washington on April 18, where she praised the American president and supported his fight against woke and diversity, equity, and inclusion "ideology."

"The goal for me is to make the West great again," Meloni told Trump in the Oval Office at the White House. "And I think we can do it together."

In comparison, other EU leaders have tried to "Trump-proof" Europe. German Chancellor Friedrich Merz, who took office in February, has criticized Trump. He has expressed doubts about NATO's future under the current administration.

"This is no longer the America we used to know," he said.

Meloni Is Receptive to Trump's Peace Efforts in Ukraine

Meloni has also been more receptive to Trump's efforts to end the fighting in Ukraine. She backed Trump's May 20 suggestion that the Vatican host peace talks between Ukrainian President Volodymyr Zelenskyy and Russian President Vladimir Putin.

"Trump likes Meloni because of her pragmatism," Teresa Coratella, Deputy Head of the European Council on Foreign Relations in Rome, told the Georgetown Journal of International Affairs in February. Meloni maintained "relations with the Republican Party and Trump" during the Biden presidency, Coratella said.

Europe could become a close ally once again, but "only if the prime minister remains the prime minister can it be our best ally," Trump said during their meeting in April. "She's a fantastic person and is doing a great job and our relationship is great."

Italy has received its first energy shipment from the US via carrier Elisa Aquila, which shipped through the Calcasieu Pass facility in Cameron Parish, Louisiana. The 165,000 cubic meters of liquid and natural gas (LNG) arrived in Italy's Port of Piombino on May 14.

Meloni Positions Herself as EU-US Bridge

With the threat of a trade war and uncertainty regarding the US's stance on ending the war in Ukraine, Meloni might be Europe's "trump card." She has strategically positioned Rome as a bridge between the Trump administration and European capitals.

“Italy will always be committed to consolidating the dialogue between the United States and Europe,” Meloni said in a statement in January. This is "as an essential pillar for the stability and growth of our communities," she added.

EU-US relations have frayed since Trump started his second term. Trump has threatened Europe with tariffs as much as 50% if the US is unable to reach a trade agreement with Brussels. The EU plans to impose approximately €100 billion in additional tariffs on US goods if trade talks fail.

The White House leader has called for NATO nations to increase their security contribution to 5% of their gross domestic product. Many NATO countries have historically struggled to meet the alliance's currently lower 2% target, earning Trump's ire.

Meloni Squabbles with European Leaders over Ukraine

European leaders have attempted to marginalize the Italian Prime Minister. During the Sixth European Political Community Summit in Tirana, Albania, on May 16, they did not invite her to take part in a joint call with Trump.

French President Emmanuel Macron organized the call, with UK Prime Minister Keir Starmer, Poland's President Donald Tusk, and German Chancellor Olaf Scholz attending.

Meloni warned about "egotism" amongst European leaders after a bitter diplomatic rift opened up between her and Macron. She told Italian journalists that they excluded her because of her refusal to send troops to Ukraine as part of a proposed "coalition of the willing."

European officials are wary of Meloni because of her political background. Critics have accused Meloni of being a "fascist" and "a danger to Italy and the rest of Europe." Her party, the Brothers of Italy, traces its origins back to Italian fascism.

Meloni Takes Practical Political Approach

Meloni has taken significant steps to distance the party's current iteration from its ideological past. So much so that even Meloni's electoral rival, former Italian Prime Minister Matteo Renzi, dismissed such accusations as "absolutely fake news."

Meloni's actions since taking office in October 2022 portray a more measured and practical leader rather than a far-right ideologue. Although often compared to Marine Le Pen, the leader of France's right-wing National Rally Party, Meloni has rejected this notion.

Le Pen emphasizes greater independence for France from the bureaucracy in Brussels. In contrast, "Meloni wants to be at the heart of the game in Europe, so her strategy is to move towards the ‘mainstream,’" a French diplomat told France's Challenges magazine.

There are "very few moments when she proves to be rigid," Professor at Johns Hopkins University's School of Advanced International Studies in Bologna, Gianfranco Pasquino, said in a 2023 interview. "She is willing to listen to contrary opinions and, to some extent of course, adjust what she wants," he said.

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