The reform of Stability pact and advanced growth from Brussels offers our country the opportunity to set up a multi-year economic policy based on reforms and investments in order to give a boost to growth by getting it out of the miserable zero point of the past twenty years, and in this way respect the European parameters for limiting the deficit by 3% and the gradual reduction of the debt/GDP ratio.
The reform of the Stability Pact shouldn't scare you: that's why
“Commissioner Gentiloni – he says Stephen Micossi, economist and former general manager of Assonime – managed to put together the preferences of the various countries, those of the North who advocate more rigid rules, and those of the South who need to get organized in order to respect the rules and avoid restrictive policies”.
The alarm that has been read in various newspapers about the "sting" that is about to arrive from Brussels of 8-15 billion a year it really has no foundation. Already today the Def presented by the Government (and for the moment rejected by the House due to the inattention of the majority) provides just one reduction of our deficit by more than half a point a year, so much so that in 2025 we should be at 2,5%. A small reduction is also expected for the debt, in line with what the new Brussels rules establish. In the immediate future, therefore, our government should not have excessive fears. Of course no new cuts have to be made, but there will be no money to meet the demands election promises of government parties on pensions, taxes, public salaries or in general to continue the policy of bonuses aimed at calming the cost of living. And after all, these electoral promises were in most cases written in sand.
The new rules of Brussels: a credible plan is needed, says Micossi
More generally, what will count is not so much the policy of the coming months, but the ability to set up a "credible" plan to stimulate growth on the one hand, while containing expenses public on the other.
“Brussels – says Micossi – offers us time to reflect without imposing drastic constraints in the short term but forcing us to propose a “credible” plan to contain the trajectory of the debt. This plan does not deprive national governments as it will be up to them to propose it and go and negotiate it with the Commission. The constraint lies in the fact that then you have to fulfill the commitments made. And this is not just to avoid the procedures excessive deficit by the EU authorities, but to avoid the market sanctions that, if confidence in the Italian government's ability to carry out its commitments were to fail, they could promptly penalize our public debt securities which are already suffering from a spread particularly high".
The League has not learned from the experience of 2011
In this sense, the nightmare of 2011 could come back when Berlusconi was forced to resign because the League prevented him from fulfilling the commitments he himself had made regarding the reform of pensions and local finance. But the League does not seem to have learned much from their mistakes, so much so that even today many of its exponents are declaring from the rooftops that we won't be able to spend the Recovery money and therefore it would be better to take note of it and give up part of that money. They don't understand that international investors continue to buy our Treasury bonds because they think that Italy will have growth close to that of the past two years and that therefore the debt will automatically reduce. But this growth is essentially based on investments financed by Europe which, moreover, should lead to a significant increase in our competitiveness. Going to say we're not able to make those investments, is eliciting new fears on the markets. A good result by Salvini and partners!
The reform of the Pact: the reduction of debt and deficit will be gradual
As they pointed out Dombrovskis e Gentiloni the Commission's proposals aim at one gradual reduction of the deficit and debt avoiding drastic austerity like the one experienced by Greece in the last decade, but forcing governments to choose policies capable of stimulating growth and avoiding focusing solely on current expenditure, as all Italian governments have done in the last twenty years. In fact, the way to reduce the deficit, and therefore the debt, should pass not through austerity policies but through nominal GDP growth (ie inclusive of inflation) which if it were around 4-5% would determine a gradual and automatic reduction of debt the stronger the lower the interest rates will be.
Italy is in one relatively good economic situation. Business and consumer confidence remains quite high. It is up to the Government to consolidate this confidence by indicating a credible public finance trajectory and accelerating those reforms (starting with competition) that can help contain prices and accelerate development. Above all, it is necessary to cut short the ambiguous declarations of many ministers on the most varied subjects, from the ecological transition to the labor market, from public finance to the institutional set-up based on a regionalism which would definitively destroy the country. All these declarations only increase the uncertainty at a time when, especially on the international front, there is certainly no shortage of reasons for concern. To overcome fears the only way is to do and explain well what has been decided.
