Share

Budget and PSB in the spotlight, Bankitalia: "Tax relief on work weighs on pension balance" and downside risks for GDP

Budget, Bankitalia warns in the hearing in Parliament on the Structural Budget Plan for the EU: the correction of GDP for 2024 brings the estimated growth to 0,8% compared to the Government's forecast of 1%. Caution grows among Italian companies

Budget and PSB in the spotlight, Bankitalia: "Tax relief on work weighs on pension balance" and downside risks for GDP

The balance on the pensions? It is “at risk” if the intention to “make the contribution reliefs structural” comes to fruition work. The notice on the Maneuver Comes from Bankitalia, who spoke yesterday in Parliament during the hearing dedicated to the Structural budget plan: abbreviated to Psb, the plan represents the'long-term commitment undertaken by Italy to manage the public finance. In fact, an evolution of the old NaDef: it has the task of tracing the perimeter within which to draw the Budget law and commits the country for the next five years.

Maneuver and Psb, what Bankitalia says

What is certain is that, according to Bankitalia, the priority – for our public accounts – remains the debt reduction, which is Italy's number one goal "regardless of the European constraints". Overall, they underline from Via Nazionale, the numbers appear "encouraging". It is true that "prudence and reforms“: above all, “more details are needed on the timing and methods” of their implementation. Speaking before the Budget Committees of the Chamber and Senate is Sergio Nicoletti Altimari, head of the Economics and Statistics department at Palazzo Koch.

La GDP correction for 2024, Bankitalia warns again, brings the growth estimated at 0,8% compared to the forecast of the1% made by the Government. And therefore, "the program outlined in the PSB it is not risk free“: the reference is to tax revenues and the “high uncertainty” of the macroeconomic framework for the objective of bring the deficit back below 3% in 2026.

“Overall – said Nicoletti Altimari – the programmatic scenario is within the range of projections of the main forecasters but is more favourable than our most recent assessments, which indicate possible downside risks".

Maneuver and Psb, Bankitalia: work tax relief weighs on pension balance

A warning from Bankitalia concerns pensions: "With regard to the expansionary measures outlined", "the intention to make the contribution relief on work structural is relevant. As already underlined in the hearing on the Def, the balance between contribution revenues and expenditure for benefits would be lost at an aggregate level, which, in the medium term, characterizes our social security system and represents one of its strong points".

Psb, Bankitalia: program not free from risks

“The program outlined in the PSB is not free of risks,” Nicoletti Altimari stressed. “First of all, to finance part of the new maneuver, the Plan uses the margin determined by the higher revenues now expected for 2024, with the implicit assumption that they are entirely permanent. Furthermore, as highlighted by the government itself,” continued the Bank of Italy delegate, “a slightly less favorable macroeconomic scenario (for example, an unexpected increase of 100 basis points in the yields on newly issued government bonds) would be enough to make it more difficult to achieve the government's objective of bringing net debt below 2026% of GDP in 3.”

Psb, Bankitalia: Downside risks on GDP estimates

“In the current PSB forecast framework, GDP grows by 1,0 percent this year, 0,9 percent next year, and 1,1 percent in 2026. The revision of the quarterly economic accounts published last Friday by Istat, not included in the framework, would entail a mechanical downward correction of two tenths of a percentage point of the estimate for the current year,” Nicoletti Altimari noted.

Psb, Bankitalia: insufficient details on reforms

“A prudent approach to public finance management must be combined with strong reform and investment action, in order to increase growth potential,” Nicoletti Altimari continued. “On this front, the document indicates areas that are relevant to the future prospects of the Italian economy.” And then: “Much will depend on how the reform measures are actually designed. It would be desirable for the Plan to provide a greater level of detail on the timing and methods of implementation.” “It should be noted,” he further highlighted, “that the Plan presented to Parliament does not include detailed information on the timeframes of the reform and investment objectives that would allow the adjustment period to be extended, nor suitable indicators for their future monitoring. This is extremely useful information, as suggested by the experience of the PNRR.”

Italian companies grow cautious in Q2024 XNUMX

In this uncertain climate, Bankitalia has launched its report on the “Survey on inflation and growth expectations” for the third quarter of 2024, and the results speak clearly: the climate among the companies and of cautionThe data, collected between August 26 and September 16, indicate that assessments of the economic situation remain moderate, with negative expectations for demand, both domestic and foreign, influenced by the decline in sales in the industrial sector. As a result, companies are in a phase of reflection, slowing down investments and keeping credit access conditions stable. Overall liquidity remains satisfactory, but employment forecasts for the next quarter have become more pessimistic, despite the fact that some expansion is still expected, particularly in construction. Companies also expect nominal spending to grow, but at a slower pace than expected; the balance between those expecting an increase and those expecting a decrease in investments has fallen to 11 percentage points, with service companies appearing relatively more optimistic.

On the front of prices, Via Nazionale reports a slowdown: the price lists for industry and services have decreased compared to the previous survey, while in the construction sector there has been an acceleration, with an increase of 4,4%. Finally, the inflation expectations show a slight increase, with forecasts of a 1,8% increase in prices in the industrial sector. However, companies are faced with rising labor and raw material costs, factors that are influencing their economic projections and contributing to a particularly complex economic landscape.

comments