A centre-right government led by a wounded prime minister and a nation’s image damaged abroad will only feed a sense of stagnation undermining the economy and weaken an already limited policy appetite for reforms, economists and analysts said on Thursday.

Italy’s below-par economy and governance problems were engrained features even before Silvio Berlusconi’s coalition was elected 18 months ago. His large parliamentary majority had raised hopes of decisive action but expectations have been further diminished by his intensified conflict with the courts and the head of state.