Italy must continue to consolidate its budget, but it can do so at a slower pace than in the past, because it has already made a great effort. This was stated by Pier Carlo Padoan, vice president and chief economist of the OECD, in an interview with Il Sole 24 Ore Radiocor.
A study presented today by the organization shows that, on average, in OECD countries, the reduction in public spending amounts to 41% of short and medium-term budgetary measures, while in long-term packages of measures it amounts to 65%. The rest is compensated by measures to increase tax revenues.
It is time to change phase, according to Padoan, because "it is possible to obtain results in terms of budgetary consolidation without impeding growth and favoring equity if the instruments are carefully chosen and this can be done in different ways from country to country country improvement intervention packages”.
According to the OECD, the balance between spending cuts and tax increases needs to be changed. "The weight of budget consolidation must be shifted from raising taxes to reducing expenditure and, within the revenue chapter, a choice must be made between the measures that are least harmful to growth and most favorable to social equity". That is, more detaxation of labor and more taxation of property: "With the same budget constraint - says Padoan - this is what the experience and the evidence of all OECD countries tell us".
As for the European context, Padoan believes that the conclusions of the last EU summit go in the right direction. According to the OECD vice president, there are strengths and weaknesses: “The first strength is having put unemployment, especially youth unemployment, at the center of the political agenda. The second strong point is the link between labor market reform and financial resources to promote employment, which is the way to lend support to government and EU action. Naturally the financial resources are limited, here is a weakness, so we need to find a way to add more. The third important aspect is the decisions on the banking union or, better, on pieces of the banking union, even if some ambiguities still need to be resolved”.
However, it is not said that all this is enough to revive the confidence of businesses and families in the economy and in the ability of governments and the European Union to emerge from the recession: "Confidence returns if jobs are created - concluded Padoan -, without jobs there is no income, no production, no trust. You have to start over from work."
