La letter sent today by the government to the EU “it is an important step towards a development and economic reform plan, but the plan must be done quickly and concretely. A lasting revival of sustainable growth passes above all through the structural reforms you've been calling for a long time, largely shared but still not implemented“. This is the call to the Executive by Mario Draghi, outgoing governor of Bank of Italy and new helmsman of the ECB since XNUMX November. Speaking at the ACRI congress for World Savings Day, Draghi underlined the need for a "full and rapid implementation" of the September maneuver, in particular "by rapidly defining and implementing the planned public spending review programme".
As for the latest plan sent to Brussels, the text provides "bold reforms, but it will be necessary to protect the weakest groups who will be affected by these measures". In a "confused and dramatic context - added the central banker - our first point of strength is the Head of State, whom I wish to thank directly". Thanks to his example, Italy must learn to “recognize the knots and not hope for others. It is essential to rely on yourself, on your own strength, on your own history, to save yourself in Europe".
The Governor then indicated the path for the revitalization of the country: "Increase competition in product markets, especially in services, build an administrative and regulatory context more favorable to business activities, encourage the accumulation of physical and human capital , raise levels of participation in the labor market”.
WE NEED A TAX REFORM THAT SHIFTS THE WEIGHT FROM LABOR AND BUSINESS TO ASSETS AND VAT
“In the short term – continued Draghi – support for growth can come from macroeconomic actions. The composition of the tax levy can be changed by transferring the weight from the taxes and contributions that weigh on work and production activity to the taxation on property and consumption”. The idea would be to shift the tax burden from Irpef and Irap to assets and VAT.
WORK, YOU NEED REFORM FOR YOUNG PEOPLE
Another priority must be, according to the governor, that of "reducing the segmentation that exists today in the labor market and making the protections provided more universal, as well as more effective and rigorous, would rebalance employment opportunities and income prospects, today strongly unbalanced for the older generation".
In this sense, “a contract with increasing protections over time and the introduction of a modern system of unemployment benefits would make the labor market more fluid and efficient, as well as more equitable. Well-designed measures of this kind could also boost labor market participation levels. The propensity towards more long-term oriented forms of savings would also benefit, which, properly channeled, could in turn facilitate the creation and development of new businesses with higher innovative potential”.
BANKS ARE READY FOR NEW CAPITAL INCREASES
As for Italian banks, according to Draghi they must be ready to carry out new capital increases in the future, since “high capital endowments make it possible to face the cyclical deterioration, to contain the cost of funding on the markets. On several occasions we have insisted that the banks carry out capital increases. Up to now, the answer has been ready and we are confident that it will be the same in the future”.
DIFFICULT ACCESS TO CREDIT, RIGIDITY ON LOANS
Furthermore, according to the Roman economist, there are signs of "tightening of loan disbursement criteria and growing difficulties in accessing credit", even if "the growth rate of bank loans to households and businesses, although decreasing, has maintained in August at values higher than those of the euro area”. In fact, from the survey on bank lending conducted by the Eurosystem, "signs emerge of a tightening of the credit supply conditions of Italian banks, limited for now to the request for higher yields".
