The Covid-19 pandemic and the containment measures launched by Governments to try to support the production categories affected by the crisis and closures have "exacerbated" the problems of public debt, "increased everywhere in Europe", and the sustainability of pension systems. This was stated by the governor of the Bank of Italy, Ignazio Visco, speaking at the "States General of Pensions" organized by Bocconi University and Deutsche Bank.
According to Visco, the impact of the pandemic on pension systems "it will be, at least in the short term, significant", since the increase in unemployment will be reflected "in higher retirement rates and lower contribution revenues".
For this reason, Italy must aim to achieve long-term economic growth “enough to ensure adequate living standards for both pensioners and active workers. Only in a growing economy, underlined the Governor, "can the containment of expenditure in relation to GDP be reconciled with the provision of socially adequate benefits".
Recalling that the debt was already historically high in many Eurozone countries and the pension system discounted the effects of population ageing, Visco stated that "the priority is to return to higher, more balanced and lasting rates of economic growth".
Referring to Italian public debt, now projected towards 160% of GDP, Visco highlighted the need to "ensure a rapid reduction of the debt over the next decade, raised by the effects of the pandemic and the indispensable public finance responses".
In the analysis published in the last annual report of the Bank of Italy, recalled the governor, “it is shown that with an average growth in economic activity of around 1,5 per cent, inflation that progressively returns little to the below 2 per cent, a gradual return of the primary surplus from the middle of the period considered to 1,5 per cent of GDP and a ten-year yield differential between Italian and German public bonds on values around 100 basis points, the debt burden could return to pre-Covid levels within a decade. It is a path of consolidation of the accounts not dissimilar from the one outlined by the government in the recent update note of the Def ".
In this context, particular attention should be paid to the productivity growth rate which risks being "permanently affected by the pandemic", added the number one of Bank of Italy.
In the final part of his speech, the Governor focused on young people, underlining how Italy is currently in first place for the percentage – equal to 22% – of NEETs, ie young people aged between 15 and 29 who do not study, do not work and do not follow training courses. It is "a dramatic waste of potential not only on an economic level, with particularly serious consequences on a social level: it is urgent to respond" and "above all the future of the country depends on this and, ultimately, the recovery from a very public debt high and the certainty of maintaining commitments on the pension front", concluded Visco.
