It was above all in his fourth Cabinet, in office in 1962 and 1963, that Fanfani promoted a new policy which revived reform and initiated an as yet hesitant experimentation with non-mandatory medium-term economic planning. Thanks to rapid growth, by the end of the 1960s Italy was approaching full employment and had become one of the world’s leading industrial countries.
The oil crisis of 1974 and the wage explosion of the following years slowed down economic growth worldwide and in Italy. Rapid inflation required drastic credit restriction. The balance-of-payments deficit, the devaluation of the lira, and the price-wage spiral, fueled in part by the wage escalator, further curbed growth and distorted the allocation of income.