Pressure on the government increases
Overview:
The overwhelming defeat in the referendum on pension reform has worsened the coalition government’s existing problems. Fiscal savings must now be made elsewhere and junior coalition partners are threatening to withdraw support unless there is a cabinet reshuffle. The government’s popularity is not helped by the slow pace of the economic recovery with fixed investment remaining very weak. For all Slovenia’s high per capita income its economy has been marked by low productivity growth and an excessive reliance on private external debt to generate growth. Weak corporate balance sheets and an undercapitalised banking system are weighing on the recovery. Even if the government survives until elections next year the incoming administration will have to deal with highly unpopular pension reform.