The disturbing opening of the Stock Exchange and the Treasury auctions for BOTs and BTPs keep Italy in suspense this week which begins after the collapse of the markets on Friday due to Cyclone Stark and which seems to reserve us other days of passion. Government bond auctions such as the Stock Exchange are a thermometer of the confidence that a country receives on the markets and these days it would be enough to look at the spread between the BTP and the Bund to warn that Italy's credibility is at an all-time low.
The maneuvers are not enough to recover confidence: rather than the reduction of the public deficit, the markets are looking at two other indicators on which Italy does not have what it takes: debt – which, as Giorgio La Malfa recalled (FIRSTonline on September 6th), should be the central objective of the consolidation strategy but has not been so far – and growth, never more forgotten than in these times. Sooner or later we will have to decide on the mountain of public debt that weighs on the shoulders of the Italians and above all of the new generations: either there is an ax blow that cuts down the stock of debt quickly and visibly or we will not recover so easily the confidence on the markets.
In fact, one of the so-to-speak cultural novelties that this crisis is revealing is that, in the face of the house on fire, even among the middle and upper middle classes there is an awareness that it will be difficult to renounce a property tax in order to really attack the debt. If at the beginning of the legislature the Government had not abolished the ICI in the first place, much of the game would have already been done. But even imagining a light balance sheet of one per thousand on the net wealth of families - as Assonime had suggested in time - the revenue would fluctuate around 9 billion euros, which is not a small amount, even if it is not enough to significantly reduce the debt .
It can be debated whether the patrimonial should concern only real estate or also securities, but if one were to decide to take this path, the important thing is not to unleash useless holy wars on principles but to make the tax fair, technically manageable and useful for community. Italians don't live on the moon and are ready to make sacrifices, provided they serve and the goals are clear. But we must avoid illusions right from the outset: even if one decides to go to the balance sheet, it is not that the debt-emergency would dissolve by magic. Without virtuous management of the public budget, year after year, and without a robust dose of privatisation, liberalization and bureaucratic simplifications, the horsepower of the economy cannot drink and without growth it is impossible to permanently reduce the debt.
Just look at what happened after the courageous horse cure of the Amato government in the early 90s: the property lent a hand to the state coffers but the public debt immediately continued to gallop. Professor Filippo Cavazzuti, who was Ciampi's right-hand man at the Treasury, calculated – right on FIRSTonline (last August 31th) – that it takes at least six years of management of the public budget in surplus and the immediate adoption of the so-called reforms that do not cost money to lower the public debt below the psychological threshold of 100% of GDP. An operation that would certainly be equivalent to a nice injection of confidence for Italy but which, as you can imagine, is not a walk in the park.
But if not now, when? And here we come to the point of the week: finally, after ignoring the development emergency for months and months, Minister Tremonti announced the launch of the so-called growth coupon, i.e. the implementation of measures aimed at promoting development, great absentee of the maneuvers that have taken place so far. The proposal, even if very late, is commendable but, beyond the intentions, the facts will tell if we are finally taking the right path.
The start of the coupon takes place with a certainty, a fear and a hope. The certainty is that, unlike in the past, public resources are few, very few. The fear is that routine solutions will be thought of: some funding here, some infrastructure there, warm cloths for export in the post-Ice void. The hope is that the bull will be taken by the horns and a lightning-fast intervention will be resorted to which can only give short-term hope for growth and employment: the so-called fiscal devaluation, i.e. the reduction of social security contributions in paychecks, financed with the increase in VAT rates.
This is the idea launched by Prometeia and relaunched by Fabrizio Onida in the Sole 24 Ore of 6 September, who writes: "Companies would thus be encouraged to create new regular jobs (not undeclared) while the greater disposable income of workers, only very partially neutralized by the modest price increases due to VAT in this phase of depressed economic situation, it would act as a boost to consumption”, with effects also on exports and on GDP growth.
Less social security contributions for businesses and workers in exchange for more VAT: it won't be the panacea for all ills but an immediate shock to the economy's deadlock probably yes. And it is certain that the markets would also notice it.
