Renzi's Comeback Hopes Fade as Italy's Self-Styled 'Demolition Man' Sinks in Polls

ROME—In 2014, 39-year-old

Matteo Renzi

electrified Italy’s voters, sweeping to power on promises to “demolish” the country’s discredited political establishment and revive an economy still badly bruised from the sovereign-debt crisis.

Now, more than a year after he was forced to resign as prime minister, polls show Mr. Renzi’s popularity plummeting, frustrating hopes of a comeback for a young politician some hailed as the reformer Italy badly needs. His sinking fortunes and those of his center-left Democratic Party, Italy’s largest mainstream and currently ruling party, increase the chances that March 4 parliamentary elections will produce a hung parliament, undermining the prospect of a strong, stable government capable of rebooting Italy’s troubled economy.

When Mr. Renzi, a brash Tuscan and former mayor of Florence, burst onto Italy’s political scene in 2012, he seized attention in Italy and abroad. His catchy stunts and slogans—he described himself as “The Demolition Man”—stole the thunder from ascendant populist parties for a time.

“The country can no longer bear a political class that not only hasn’t fixed problems in the last 25 years, but has aggravated them,” he said at a party gathering in 2012.

His promises of pro-market policies appealed to parts of the Italian electorate that don’t traditionally support the Democratic Party and raised hopes in other European capitals for a revitalized Italy. A few months after he became Italy’s youngest-ever prime minister in February 2014, polls showed support for the party soaring to 43% of voting intentions.

But Mr. Renzi resigned in December 2016 after Italians rejected a referendum he backed on constitutional reforms. Renzi had sought to push the referendum through by tying it to his own fate, but by then his popularity had already begun its decay. Paolo Gentiloni, a fellow member of the Democratic Party, succeeded him as prime minister.

Until last summer, supporters of Mr. Renzi, who remains the party’s head, hoped to see him return to lead the government after the elections. But since then, his popularity has sunk further. The centrist policies he pursued as premier—particularly a sweeping overhaul of labor rules—alienated his leftist supporters while failing to deliver hoped-for economic dividends. Today, the Democratic Party draws only about 23% of voting intentions.

The path to that decline was marked by some notable successes. The labor overhaul, which loosens rules for hiring and firing employees, coupled with billions of euros in temporary tax incentives for hiring, helped add one million new jobs, according to Mr. Renzi. They also helped bring down unemployment from a high of 13% in February 2014 to 11% today.

“Looking at the outcome, you have to accept that they have done something,” said

Marco Tronchetti Provera,

chief executive of tire maker Pirelli.

But joblessness remains a scourge in Italy, where a third of young Italians are out of work. And the Italian economy is still among Europe’s worst performers, growing just 1.5% last year—half the pace of once-troubled countries such as Spain.

Mr. Renzi’s critics cite that sluggishness as evidence that Mr. Renzi was too timid as premier, failing to attack problems such as Italy’s lofty tax rates and devilishly complicated bureaucracy.

“The impression is that there has been no strategic planning, therefore no long-term investments or no clear view on what to concentrate efforts for the legislature,” said

Carla Ruocco,

a lawmaker for the populist opposition 5 Star Movement.

The woes afflicting Italy’s banks also damaged Mr. Renzi’s reputation. During his watch, the government spent billions to rescue or liquidate seven ailing lenders. Those interventions imposed large losses on hundreds of thousands of shareholders and bondholders.

At an event in September, one heckler accused Mr. Renzi’s government of having “stolen” the savings of more than 100,000 small investors who lost billions in the bank rescues. Mr. Renzi’s brusque response to the woman, who was escorted from the audience, made headlines in Italian newspapers.

In a bid to reconnect with voters and polish his record as premier, Mr. Renzi has been crisscrossing Italy in recent months to meet company owners, local chapters of the party and factory workers. His support has continued nonetheless to erode.

“Italy is better off than before,” Mr. Renzi said in a prime-time television interview Monday evening. “I hope after the election the [Democratic Party] will have the numbers [to form a government], but it will be difficult.”

The fragmentation of the electorate—compounded by the Democratic Party’s decline in the polls—sharply reduces the likelihood that any group will emerge with a parliamentary majority in March. If none does, President

Sergio Mattarella

could ask the largest parties, including former Prime Minister

Silvio Berlusconi’s

center-right Forza Italia, to form a cross-party grand coalition with the Democratic Party.

But if the Democratic Party’s showing is poor, even such a coalition may struggle to reach a majority, raising the risk of another round of elections.

“The more the Democratic Party weakens, the more a grand coalition becomes unrealistic,” said

Federico Santi,

 an analyst at Eurasia Group.

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