A worse than expected rejection arrives against Italy from Brussels. In the report published today on the reforms carried out by the Member States, the European Commission reiterates that in our country "excessive imbalances" persist at the macroeconomic level due to "the high public debt" and the "prolonged weakness of productivity dynamics", in a context of “non-performing loans at a still high level and high unemployment”.
RISK OF CONTAGION IN THE EU
Not only that: the EU executive goes further, emphasizing that there are "risks with cross-border relevance". In other words, Brussels fears the Italian situation will infect other EU economies (on this point we are placed on the same level as Greece and Cyprus), also because conditions in our country are not destined to improve in the immediate future.
THE DEBT WILL NOT DROP IN THE NEXT YEARS
In fact, the Commission "does not expect the debt/GDP ratio to decrease in the next few years", because "the weak macroeconomic outlook and the government's current budgetary plans, even if less expansive than the initial plans for 2019, will lead to a deterioration of the 'primary surplus'.
THE UNSOLVED PROBLEM OF PRODUCTIVITY
Furthermore, in Italy "cost competitiveness is stable - the document continues - but weak productivity growth persists", which is "rooted in long-standing issues concerning the functioning of the labour, capital and product markets, aggravated by shortcomings in the public administration and in the justice system, which weigh on the growth of potential GDP".
NPL BANKS: DIFFICULT TO MAINTAIN THE PACE OF REDUCTION
As for the banking system, "the stock of non-performing loans has continued to decline significantly", but maintaining the current pace of reduction "could prove challenging, given market conditions".
THE SPREAD RISES AND WEIGHTS ON THE GDP
On the debt side, continues Brussels, "sovereign debt yields are higher than the levels of the first months of 2018 and affect the financing costs and capital reserves of banks, weighing on credit to the rest of the economy and on the growth of the GDP".
REFORMS STALL
The Commission is concerned about the stalling of structural reforms: “Despite some progress in bank balance sheet repair, insolvency reform and active labor market policies, the momentum for reforms essentially stalled in 2018”.
According to the vice president of the European Commission, Valdis Dombrovskis, “of all the European countries, Italy is the one that has suffered the most pronounced slowdown. The damage caused by the Italian government's uncertainty regarding its budgetary policy has caused the economy to slow down”.
REJECT QUOTA 100 AND CITIZENSHIP INCOME…
More specifically, for Brussels, the 2019 budget law "includes policy measures that reverse elements of previous important reforms, particularly in the pension sector - continues the report - and does not include effective measures to increase growth". On the contrary, these measures "will weigh negatively on the sustainability of public finances, productivity and potential gross domestic product growth".
… BUT THE PARLIAMENT APPROVES THE “DECRETONE”
Ironically, just as it launched its arrows from Brussels, the Senate Chamber gave the green light to the "decreton" on CBI e quota 100 for pensions with 149 votes in favour, 110 against and 4 abstentions. The measure is now being examined by the Chamber.
Among the last-minute amendments approved at Palazzo Madama – in addition to those on foreigners and divorced couples – there is an obligation for citizens' income beneficiaries to accept every job offer with a salary of at least 858 euros per month.
Another modification of the text passed in the Senate requires those who receive the income to carry out 8 to 16 hours a week of useful services for the community in the Municipality of residence.
