Assonime deeply evaluates the Update Note of the Def launched by the new Pd-M5S government and, while emphasizing the importance of reducing the spread, expresses doubts about the main measures contained within the 2020 Maneuver. In detail, the board of directors of the association chaired by Innocenzo Cipolletta "noticed how the decision not to increase VAT excessively restricted the Government's economic manoeuvre, which does not find the space to mobilize adequate resources for the reduction of the public debt".
The budget law that the Government will approve in mid-October will be expected to be around 30 billion, a large part of which (23 billion) will be earmarked for the sterilization of the safeguard clauses which would have led to a VAT increase next year. To promote growth and reduce debt, therefore, only 7 billion remain on the plate of euros that will be used to slightly lower the tax wedge (2,5 billion), for the extension of the incentives provided by Industry 4.0, to raise the resources allocated to public investments and to refinance already planned expenses.
"The choice of the Government - comments Assonime - seems to have been to identify a debt target that includes all the flexibility available and then, subtracting what is necessary for the sterilization of the VAT safeguard clauses, to allocate the few remaining resources to some instances deemed worthy" .
“Overall, a budgetary strategy is outlined that resembles the narrow path of the last legislature: all available budgetary space is negotiated, postponing debt reduction to subsequent years. The resources thus obtained are distributed without producing significant effects on growth and therefore in the end the debt/GDP ratio continues to increase and the economy continues to stagnate”, continues the association.
Indeed, with regard to public debt, Nadef predicts that in 2019 the debt/GDP ratio will rise to 135,7% and then drop by half a percentage point next year. In the two-year period 2021-22, however, it should reach 131,4%. “This reduction depends on: a) the performance of nominal GDP and in particular of the GDP deflator which in the two-year period 2021-22, according to Government estimates, accelerates to 1,7%; b) the reduction in interest expenditure” explains the association, emphasizing “the importance of reducing the spread, thanks to the resumption of constructive contacts with Europe”.
Remaining on relations with the European Union however, Assonime also highlights the risk that Italy's new requests for flexibility could give rise to problems on other fronts, such as the one – extremely delicate – relating to the completion of the Banking Union, which presupposes “the sharing of risks that the other member states may not accept. There is also the danger that in the event of a crisis, recourse to the common instruments of European financial support proves difficult”, concludes the association.
