today government Meloni revealed to the cabinet the scheme of the Structural budget plan (PSB), an important innovation introduced by the recent European rules of the Stability and Growth Pact. This plan represents the first step to put public accounts in order and address Italy's debt and deficit challenges.
At the moment, the PSB looks more like a draft that a detailed plan. In fact, there is a lack of precise indications on how and how much to remodel public spending in the next seven years. For now, we only have a "trend" picture of the economic variables.
What's inside the Structural Budget Plan?
The official note from Palazzo Chigi offers some key information on the path that the government intends to follow: to stay on course, the net spending growth will be confirmed about at 1,5% and the government aims to do so reduce the deficit below 3% of GDP as early as 2026. But that's not all: the Plan also includes a series of reforms and investments aimed at improving public administration, justice and the business environment, continuing the path traced by the PNRR. These objectives are in line with European expectations, but the lack of specific details on how to achieve them still leaves many unknowns.
The final document will not be ready before September 23th, when Istat will update the estimates on GDP, debt and deficit. The government hopes that a upward revision of GDP may improve other balances and create space for new measures, such as the boost to the birth rate promised by Giorgetti. In the meantime, the government will have to manage the pressure from the majority parties on crucial issues such as personal income tax, the flat tax and minimum pensions. Further complicating the situation is the issue of the Omnibus decree, which has seen the presentation of over 700 amendments.
The next steps
Once updated, the PSB will be sent to Brussels, probably in early October, and will then go to Parliament for approval. It is possible that the Plan will be merged with the Budget planning document (Dpb), which must be submitted to Brussels by 15 October. This document will contain the Forecasts macroeconomics and guidelines for the 2025 budget maneuver. The government will have to take prudent measures and reforms to reduce spending, increase tax revenues and stimulate economic growth.
With a deficit/GDP ratio of 7,4% and a public debt of 137% of GDP, Italy must present a rigorous and sustainable recovery plan. The PSB must be updated every five years, with annual reports on progress towards the objectives set.
