Starting from 1983, Craxi led the third longest-lived government of Italy during the republican era,Composizione del Governo Craxi I being a close ally of two key figures of DC, Giulio Andreotti and Arnaldo Forlani, in a loose cross-party alliance often dubbed CAF.I quattro anni che sconvolsero l'Italia. Ascesa e crollo dell'impero del CAFLa stagione del CAF Craxi had a firm grasp on a party previously troubled by factionalism, and tried to distance it from the Communists and to bring it closer to Christian Democrats and other parties. During Craxi's tenure as Prime Minister, Italy became the fifth largest industrial nation in the world.Le conseguenze economiche di Craxi However, inflation was often in the double digits. Against trade union resistance, Craxi reacted by abolishing wage-price indexation (a mechanism known as scala mobile or "escalator"), under which wages had been increased automatically in line with inflation.La storia del PSI. La riforma della scala mobile Abolishing the escalator system did help reduce inflation, which was also falling in other major countries, but in the long term it inevitably increased industrial action as workers had to bargain for better salaries. In any event, the victory of the "No" campaign in the 1985 referendum called by the Italian Communist Party was a major victory for Craxi.
