“It is necessary the maximum effort to protect the economy of households and businesses from the serious emergencies of the present". This was said, from the stage of the 98th edition of World Savings Day 2022 organized by Acri, the Economy Minister Giancarlo Giorgetti, in his first official speech after his appointment and move from via Veneto to via XX Settembre.
Giorgetti has promised continuity with the past, stating that "the new Government is oriented towards confirming its commitment, in the coming years, to reduce the public administration deficit and the debt/GDP ratio".
He also attended the event the Governor of the Bank of Italy Ignazio Visco which sent a clear message to Frankfurt and to the "hawks" of Northern Europe: the rate hike is indeed necessary, but it must be gradual and not predetermined.
Giorgetti: "We need to protect families and businesses"
“We need to adoptand policies to quickly combat inflation, capable of curbing the growth of price increases, but above all such as to prevent this growth from being prolonged”, underlined Giorgetti in his speech at the Auditorium della Tecnica in Rome. “It is necessary – he continued – for the financial sector to fulfill its mission of helping savers and investors to make informed choices which direct their resources towards optimal objectives, consistent with a healthy growth of the country, aware of the need to ensure the budget balance in the medium to long term”.
"It is necessary the utmost effort to protect the economy of families and businesses from the serious emergencies of the present, in the belief that - in these years of uncertainty - it is necessary to protect the dignity and industriousness of citizens and not the logic of debt and subsidies; and that businesses must be protected from price volatility and the scarcity of resources, not only by ensuring the availability of liquidity, but also that this availability is accessible under the most advantageous conditions possible”, Giorgetti said on World Savings Day.
After quoting Einaudi several times and having repeatedly confirmed his willingness to respect the commitments made, reducing deficits and debt, the minister, currently engaged in drafting the Budget Law, underlined that the Government "is also deeply convinced of the urgency to protect families, especially the weakest, from rising bills and shopping cart, to defend the competitiveness of our companies, even in the face of the huge support measures announced by other European countries (such as Germany and France) and not only (for example Japan)".
“We must not forget that there is a large debate underway for the reform of the Stability and Growth Pacthopefully the Commission's proposal to revise the budgetary rules will be adopted to achieve an adequate balance between fiscal and debt sustainability and support for growth", highlighted the number one of the MEF.
Giorgetti: "We evaluate interventions on the cost of credit"
“We are witnessing an increase in the cost of credit and, in the short term, it could register a further restriction in the policies of offers to young people, households and businesses, which must be carefully monitored, in order to evaluate any necessary intervention", said the Minister of Economy, adding that the Government is "evaluating how to improve the measures to support the economy in line with the framework of state aid, in particular public guarantees to companies".
Giorgetti on Mps: "Government is working on the orderly transfer of the share held by the State"
On the day in which the first phase of the 2,5 billion capital increase launched by Monte dei Paschi ends, Giorgetti confirmed that "the current government will work to manage, in an orderly manner, the disposal of the shareholding held by the State (equal to 64% of the share capital ed.) in compliance with the commitments with the European Commission, leaving to the market a strong banking entity capable of operating in a diversified and geographically articulated economy such as the Italian one”.
Visco warns the ECB: "The rate hike will have to be gradual and not predetermined"
"The high uncertainty" that is characterizing the global economic situation requires us to move forward gradually with the "raise in official rates by the ECB". An increase that "will have to continue in order to mitigate the risk of persistence of high inflation". What should Italy do for its part? Proceed with the "complete and without delay" implementation of the National Recovery and Resilience Plan which "could result in a significant strengthening of the growth potential of our economy. Provided that the inflation tax does not push us to repeat the mistakes of forty and more years ago, when the persistence of inflation due to the vain run-up between prices and wages was associated with many years of excessive deficits, with the ultimate consequence of the financial and currency crisis which marks the thirtieth anniversary in recent months”. This is the warning issued by the governor of the Bank of Italy, Ignazio Visco, during his speech on World Savings Day.
“The rise in official rates will have to continue to mitigate the risk that the persistence of high inflation caused by a succession of 'supply' shocks will translate into the expectations of households and businesses, fueling price dynamics and determining stronger increases in wages – said Visco – The rate of increase in interest rates and their point of arrival, however, cannot be predetermined on the basis of preconceived projections or scenarios, which at this stage are purely indicative. The high uncertainty requires you to proceed gradually, carefully assessing the adequacy of the monetary stance on the basis of the evidence that will gradually become available".
After sending a message to Frankfurt, from the stage of the Technical Auditorium, the Governor of the Bank of Italy issued a further warning: "We must not underestimate the danger that the deterioration in economic prospects proves to be worse than expected, making an excessively rapid step in the normalization of policy rates disproportionate”.
Visco: "The cost of debt will rise"
Visco does not hide the consequences of the increase: "following the necessary normalization of monetary conditions - he said - the cost of servicing the debt is set to rise. This makes it even more important to outline a realistic path to continue the phase of gradual recovery from the high levels of public debt to GDP ratio started in the last two years". "It would be a decisive signal of credibility for the markets - underlined the governor - which would translate into lower premiums for sovereign risk, containing the burden of interest and reducing the effort necessary to achieve the budget objectives".
Visco: "Margins for more limited aid to households and businesses"
Despite this, the Government must commit itself to protecting households and businesses, supporting them and helping them to face the soaring energy costs. However, it is necessary to take into account the fact that “” the margins for the disbursement of aid to households and businesses will be probably much more limited than in the last two years“, but “they can be expanded with the reduction of other expenses”. Visco therefore hoped for "temporary and targeted interventions, intended for households and production sectors in greater difficulty", which "could help to contain the reduction in real incomes and, in this way, the pressure on inflation connected with wage demandsi without compromising the balance of public finances".
Visco: "Banks are able to withstand the impact of NPLs"
Compared to the past, banks are more money and for this they should be "able to absorb shock” deriving from the slowdown in GDP and the increase in NPLs, reassured Visco. According to the Governor of Bank of Italy: "some banks could encounter greater difficulties", but in any case all will have to pay "particular attention, even with the punctual use of provisions, to the increase in credit risk, thus avoiding that the unavoidable tightening of lending criteria could turn into a severe credit crunch”.
Patuelli: "Tax investments less than savings, a second Pnrr is needed"
“Responsibly invested savings – says the president of ABI Antonio Patuelli – not for speculative purposes it is indispensable for resilience to the energy crisis and inflation and for the solid and prolonged recovery of development and employment”.
For this reason, continues the number one of the ABI, "We ask that medium and long-term savings investments in Italy be taxed less than short or very short-term speculative transactions. Until there is also fiscal uniformity in the European Union, Italy will have to attract savings in the ongoing competition between states to attract capital”.
According to the president of the ABI "the budget law must also be an opportunity to better protect savings, as well as to limit the public debt which must not grow indefinitely, also in order not to compromise the overall financial equilibrium and the savings of the Italians. It is necessary to strengthen the virtuous economic, ethical and social circuit, favoring stable savings also for loans in productive investment".
Moving on to energy costs, Patuelli stated: “We need to as soon as possible a second Pnrr for cost reduction and for sustainable energy investments. As in the most difficult phases of the pandemic, with the preparation of the first Pnrr, it is now necessary to build a new climate of confidence which is essential to support resilience, for the recovery of development and employment".
Perfume: "The social elevator only works downhill"
The uncertainty that is characterizing the global economic scenario is at the center of the interventions of all the speakers. "Today the social elevator only works in descent – underlined the president of Acri Francesco Profumo – 42% of poor people have seen their situation worsen compared to that of their parents. The Italians seem disheartened and no longer able to get back up. Hope seems eroded." Also for this reason, those who have the resources to invest prefer to keep their savings in their account: “In Italy just 5% of household savings are invested in our country, against 14% in Germany and 34% in France”, recalls Profumo, underlining how the sharp reduction in local branches has contributed to this situation.
