Due to the pandemic, Italy will produce additional public debt of almost 500 billion euros. According to the calculations of Sun 24 Hours, with the latest budget law and the refreshment decrees, the Conte 2 government inflated the deficit by 426,8 billion in the years from 2020 to 2026. Added to this sum are the 40 billion of the new budget gap that the Draghi government he is about to ask Parliament with the Def, plus another 30 billion (spread over five years) to be kept in reserve for the measures that will not find space in the Recovery Plan. In total, the bill amounts to 496,8 billion: almost two and a half times the money allocated to our country with the Resilience and Recovery Plan.
Result: the Economic and Financial Document approved by the Council of Ministers contains an estimate of the ratio deficit/GDP 2021 in the order of 11,8%, while debt/GDP will settle at 158-160% and the GDP estimate rises to 4,5% (4,1% with unchanged policies). The government today decided on the new deviation of 40 billion, partly intended to constitute a fund of 20 billion to be spread over 8 years in support of businesses and VAT numbers. The fund has a prominent place in the objectives of the Draghi government and will be the subject of a subsequent decree dedicated precisely to companies which will partially follow the previous Sostegni Decree. In the menu of the meeting of the Council of Ministers there are also new aids on rents, Imu of tourism, occupation of public land as well as the 6,7 billion to finance the transition 4.0 and the selective stop of a series of tax deadlines and measures for corporate liquidity. The extension of the moratoriums on loans and the postponement of the crisis code are expected.
For the moment, the public finance numbers are not a problem, because the Stability Pact will remain suspended at least until the end of 2022 and, in the meantime, debt yields are kept low by the ECB, which buys government bonds through two programs (the Quantitative easing ordinary and the Pepp linked to the pandemic).
It remains to be seen what will happen when the Eurotower reduces monetary support and above all when the rules on public finances are applied again. If the Stability Pact were to come back into force without changes, it would impose unsustainable repayment maneuvers not only for Italy, but also for all the countries forced in recent years to get more into debt than they have ever done before.
This is why the European Commissioner for Economic Affairs, Paolo Gentiloni, will propose in the autumn a reform of the Pact. The key points should be an easing of debt constraints and the possibility of deducting investments for the environment and digital (which already represent the heart of the Recovery Fund) from the deficit calculation.
A new one will be staged on this issue clash between Mediterranean countries (Italy, France, Spain and Greece) e frugal them (Austria, Finland, Denmark, Sweden and the Czech Republic), with the Germany which – as always – should act as the needle of the balance. And the outcome of this confrontation is by no means obvious, especially since Angela Merkel will no longer be at the helm of the Berlin government.
In the meantime, it is not excluded that - once the Recovery Fund becomes operational - another game will open up in Europe: the one for make the use of Eurobonds structural, currently only planned to fund the 800 billion extraordinary plan.
