Under the “incomplete revolution” of women’s role in society, the familialism of the “Mediterranean model” of welfare is under pressure to deliver on gender equality. Despite a common fascist legacy and Catholic culture, Italy and Spain diverged in gender equality policy-making. Under Socialist prime minister Zapatero (2004 –11), Spain introduced innovations to its gender equality institutional machine, long-term care, parental leave and a new ambitious program for childcare, becoming a role-model for many EU member states. While Spain was engaging in reorientation of its welfare state, Italian “inertia” continued under the centre-right Berlusconi government. This research argues that Spain was able to engage in progressive policy-making due to a favourable configuration of politics and a lack of fiscal constraints, with a low public debt and a fiscal surplus. On the contrary, Italy faced party fragmentation and factionalism and fiscal constraints in the early 2000s. Post-2010, fiscal constraints appear as the single most important aspect driving policy-making, especially coupled with Troika supervision. Emblematic of this is the volte-face of the Zapatero government embracing austerity. Austerity has worsened the situation of women in Italy and to stopped the Spanish wave of progressive policy-making. After the volte-face of the Troika on austerity and the end of aggressive fiscal consolidation in Europe, the research asks what options are there for pursuing an inclusive and gender-equitable growth path.