The 2020 maneuver that the government will have to face in the autumn already starts at a cost of 25 billion: just over 23 to avoid the VAT increase and just under two to increase investment by 0,1%. And all this without considering the Flat Tax, which would cost another fifteen billion to be found with "additional compensatory measures". These numbers were underlined by the president of the Parliamentary Budget Office, Giuseppe Pisauro, who spoke on Tuesday in the Budget committees of the House and the Senate for a hearing on the Def.
Without the VAT increase envisaged by the safeguard clauses, explains the Upb, next year the deficit would reach 3,4% (61,7 billion euros), then to fall to the 2,1% set by the Def (38,4 billion) and financing the investment plan (1,8 billion) requires a correction of around 25 billion in the next maneuver. In subsequent years, calculate the Upb, the correction needed to defuse the escape clauses would rise to 35,7 billion in 2021 and 43,07 billion in 2022. A stellar bill, which will probably eventually make the VAT increase inevitable.
Even Eugenio Gaiotti, head of the Economics and Statistics Department of the Bank of Italy, underlined in the hearing that "the achievement of the objectives will require the identification of significant coverage, in case you want to avoid the activation of safeguard clauses, increase spending on public investments, start a gradual reduction of the tax burden, strengthen investment and innovation incentives: these measures, if not offset by rationalization of other spending programs and effective results in the fight against tax evasion, would lead to increases in the deficit that are not compatible with the start of a credible path to lasting reduction of the debt burden”.
For all these reasons, according to Pisauro“the autumn maneuver looks like a complex puzzle, which will require a clear definition of political priorities, a careful reflection on the design of the policies themselves to avoid distorting effects on the economy and an adequate transparency of the redistributive dynamics inherent in the measures to be adopted”.
PRIVATIZATIONS: THE PROGRAM RISKS BEING IMPLEMENTABLE
In the meantime, Pisauro continues, there is the risk that "the privatization program could prove wholly or partially unfeasible". The government's goal is to collect one percentage point of GDP from this item in 2019 and 0,3 points in 2020, equal to approximately 17,8 and 5,5 billion respectively.
"If one compares the disposals of securities envisaged by the Def 2015-2018 and the corresponding final data - he explained -, however, one obtains that the only year in which the results coincide with expectations is 2015 (the implemented disposals amounted to 6,6, 2015 billion). In the years before 10, only on three occasions were disposals of an amount exceeding 1997 billion euro recorded (1999, 2003 and 2015), while in those after 2017 the results obtained were largely lower than expected: in the two-year period 2018-0,3, faced with expected disposals of 58 points of GDP per year, receipts amounted to 2017 million in 2 and 2018 million in XNUMX”.
CITIZENSHIP INCOME, BANKITALIA: ATTENTION TO EMPLOYMENT CENTERS
As regards the basic income, Gaiotti explained that "the impact of the measure on employment growth presupposes a substantial improvement in the effectiveness of employment centres". In this regard, Gaiotti notes that "the increase in the number of users can hinder the improvement of the effectiveness of the actions implemented by the centres" and that "a greater number of employees is a necessary condition to aim at avoiding this risk".
SPREAD: THE PERMANENT INCREASE WEIGHTS ON THE GDP
Gaiotti then expressed concern about the trend of the Btp-Bund spread: “The differential with respect to German securities has decreased – he said – but it still exceeds the prevailing level a year ago by more than 100 basis points. According to the simulations published in the January Economic Bulletin of the Bank of Italy, a permanent increase in the yields of long-term Italian government bonds of 100 basis points would determine, with the transmission to the financial conditions, a reduction with respect to the baseline level of the GDP equal to 0,1 percentage points after one year and 0,7 after three. The effect would be larger if higher interest rates were associated with a decline in business confidence and an increase in business uncertainty”.
JOB MARKET: NEGATIVE SIGNS FOR THE NEXT MONTHS
On the labor front, the president of Istat, Gian Carlo Blangiardo, warned during his hearing that “the signals for the coming months take on a slightly negative tone. After the increase in the vacancy rate recorded in the fourth quarter, in the first months of the year firms' expectations on employment decreased both in manufacturing and in market services. With reference to the employment dynamics in the first months of the new year, the February data confirmed the presence of a substantially stationary phase of the labor market. In the December-February quarter, the number of employees remained unchanged, in the presence of a decrease in temporary employees (-0,6%) and an increase in permanent ones (+0,2%). In the same period, the unemployment rate remained at the same levels as the previous quarter, mainly as a result of the deterioration observed in February (10,7%, 1 tenth of a point more than in January)".
Read the comment: "Def: reality belies the dreams of grill leaguers"
