“The impact of individual measures on the country's economy must be assessed within the framework of the entire manoeuvre. Greater resources for public and private investments, lower tax burden on small and medium-sized enterprises and self-employed workers, a boost to generational turnover on the labor market and support for the most vulnerable subjects: this set of measures will lead to an increase in growth to 1,5 2019% in 1,6, to reach 1,4 and XNUMX in the following years". This is what Treasury Minister Giovanni Tria writes in the letter sent to the EU on the update note to the Economic and Financial Document.
"The achievement of these objectives - continues the letter - will also be achieved thanks to a careful design of interventions both on the investment side and on that of active support measures for work and social cohesion that guarantee the overall stability of the system" .
THE EXPENSES PROVIDED FOR BY THE DEF
Meanwhile, Palazzo Chigi makes it known in a note that “the Def is in the Chambers and confirms the objectives, the implementation times of the reforms and the figures. There will be over 16 billion for basic income and the Fornero reform (quota 100)”. In particular, “9 billion are foreseen for income e citizenship pensions and 7 for the 100” quota, plus another billion for the reform of the employment centres. Other items of expenditure concern the 15% flat tax for VAT numbers (2 billion), extraordinary hiring for law enforcement agencies (1 billion) and support for those defrauded by banks (1,5 billion).
THREE ACCOUNTING FUCKS
Overall, the maneuver comes close to 40 billion euros, largely financed in deficit. But in Brussels they are convinced that the accounts do not add up. The suspicion is that the Italian government has included some accounting tricks in the Def to indicate data that are lower than the real ones to keep up the promises to cut the debt by as much as four percentage points in three years and to gradually reduce the deficit.
In particular, there would be three tricks: overestimated GDP growth for 2019, 2020 and 2021 (raising the denominator reduces the deficit/GDP and debt/GDP ratios); cancellation of the VAT clauses only for next year (the allocations for 2020 and 2021 are deferred to subsequent measures); a very high (and therefore unlikely) forecast on the revenue guaranteed by privatizations: even 10 billion in the two-year period 2019-2020.
Then there is another fact to pay attention to: the structural deficit, ie the deficit net of the economic cycle and the one-off measures decided by the government. This is the fundamental number in the eyes of Brussels and in recent months Tria had always promised that Italy would reduce it. Now the opposite is written in the Def: a deterioration of 0,8% is forecast for 2019, 2020 and 2021. In this way, the government admits that the process of reducing structural debt will only start from 2022 and that therefore the Italy violates the rules of the Fiscal Compact.
"A TOTAL MADNESS, RISK OF DEBT RESTRUCTURING"
An anonymous European source cited by the Reuters agency judges the spending forecasts contained in the Def as "absolute madness". Not only that: "The growth forecasts in Italy are ridiculous - says the same source - Growth, especially with this government, not only will not improve, but it will get worse".
Another official says that, if the accounts get out of control, Italy could not be bailed out as was done with Greece. In fact, our country is too big to be supported only with the ESM, not to mention the fact that there would be problems of political will: "Especially in northern Europe, but also other countries, they have no intention of resorting to the Save States Fund to Italy".
For this reason "the only way would be a great, enormous debt restructuring", with the consequence of "wiping out the savings of a large part of the Italian people".
DRAGONS FROM MATTARELLA
To address concerns of this kind, last Wednesday the president of the ECB, Mario Draghi, paid a visit to the head of the Italian state, Sergio Mattarella. The two talked about spreads, tension with the EU and concern for the accounts. Draghi believes that the Italian government is dramatically underestimating the consequences that the maneuver risks having on the markets, also because from January Italy will no longer be able to count on the umbrella of Quantitative Easing.
The governor of Bank of Italy, Ignazio Visco, who has constant contact with Draghi and Mattarella, is also part of this sort of institutional protection network.
