Gonzi ‘weakened by divorce’ – Economist Intelligence report

By voting against divorce the Prime Minister has dented the democratic credentials of his party, a report by the Economist Intelligence Unit (EIU) says.

By voting against the divorce bill despite the referendum result in favour, Prime Minister Lawrence Gonzi “dented the democratic credentials” of the Nationalist Party which now risks “losing the support of its liberal faction”, a report from the Economist Intelligence Unit has warned.

Although the PN will continue experiencing “severe internal strains”, these are not expected to lead to an early election the report concludes.

Apart from the fall-out of the divorce referendum, divisions within the PN were further exposed by “the disinclination” of two backbenchers to support the government over an Opposition motion condemning Cabinet members’ “large pay increases.”

But these ultimately backed the government for reasons of “political and government stability”.

The government’s room for political manoeuvre is also limited by pressure from the EU for fiscal consolidation. “Structural reforms on healthcare are not likely to materialise, while pension reform is likely to be limited.”

Real GDP growth is projected to slow down considerably in 2011-12, on account of domestic and external fiscal consolidation. But while inflation remained high, unemployment eased further.

The Economist Intelligence Unit, a division of London’s Economist Group, is one of the most respected provider of country analysis for governments. EIU reports are normally written by local correspondents. Past authors included former Labour president Mario Vella, a confidant of present Labour leader Joseph Muscat; and former Labour party leader Alfred Sant.

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