Italy must continue to follow the growth support strategy "beyond the European rules”, but at the same time it is necessary “lower the tones” in relations with Europe. Economy Minister Giovanni Tria said this on Tuesday morning in a hearing before the House and Senate Budget Committees on the update note to the Def.
“The EU Commission has expressed concern about the modification of the programmatic path – he explained – Now a phase of constructive dialogue with the Commission which will be able to evaluate the well-founded reasons for the government's growth strategy outlined by the manoeuvre. In this constructive discussion, I want to declare my agreement with the Speaker of the Chamber on the need to tone it down".
REDUCE THE GROWTH GAP WITH THE EU AND CUT DEBT/GDP
The minister then reiterated that in order to lower the debt/GDP ratio it is necessary to focus on the acceleration of the gross domestic product: “The growth results have not allowed in the past decade to reduce public debt which has also increased in relation to GDP. At this point the government has set itself the goal of significantly reduce, within the first two years of the term, the growth gap with the Eurozone and achieve a first significant decrease in the debt ratio over the next three years".
According to the number one of the Treasury, the time has come to "bet on the citizens", a "new and courageous" choice, but not for this reason "fearless and irresponsible. Our aim is to have financial stability, which cannot be achieved without social stability: it's time to make courageous decisions by overcoming the past".
CITIZENSHIP INCOME
As regards the CBI, Tria said that it is “a necessary condition to intervene decisively to avoid feelings against free trade and the emergence of feelings against Europe. We are not on global markets without networks for the losers and without the ability to govern the transition. Citizenship income is an investment in the most vulnerable parts of society to ensure that they become an active part again. It is a tool designed to support vulnerable groups who have suffered the crisis and are suffering from the technological transition. It will eliminate unacceptable pockets of poverty in the seventh country in the world. You cannot stay in global markets without strengthening the safety nets for the losers”.
VAT INCREASE
The minister then reassured that the VAT increase will also be avoided in 2020 and 2021, at a cost of 5,5 and 4,4 billion respectively. The update note to the Def, however, does not contain appropriations for this purpose for the two-year period 2020-2021, but only for 2019.
PENSIONS
As for the pension chapter, Tria said that with the maneuver will come a "temporary redefinition of the conditions for retirement, the creation of specific windows to allow the labor market to keep pace with technological processes and to accelerate renewal, hiring new people with new profiles. The current system guarantees long-term financial stability but curbs the physiological turnover in the short term, with young people staying out and the elderly who cannot go out”.
"INACCEPTABLE" DELAY OF THE ECONOMY 10 YEARS AFTER THE CRISIS
The minister then underlined that Italy is in a situation of “lag in economic growth and employment, a delay that is no longer acceptable ten years after the crisis": the GDP is still 4 points lower than that of 2008, the territorial gaps "have widened" and "people in poverty" and in a state of material deprivation and low jobs are 17,4 million according to 2017 data, with a gap of 4,5 million compared to the Europe 2020 objectives.
AFTER OK MANEUVER MARKET UNCERTAINTIES WILL DISSOLVE
During the hearing, the spread widened to 307 basis points, with the yield on the 3,63-year BTP jumping to 2014%, on January XNUMX levels. "We expect that once the government's economic policy program is approved the uncertainties that have weighed on the government bond market in recent months will dissolve from Parliament - Tria went on - and so the forecasts for growth and public finances will be able to improve significantly".
GROWTH FORECASTS MAY BE EXCEEDED
Furthermore, the estimates, explained Tria again, “do not include the feedback effects of higher programmatic GDP growth: yield levels were used on the average of market data on days in which there were strong tensions on the spread. The forecast is therefore based on cautious if not downright pessimistic levels of interest rate yields on bank loans”.
Therefore, continued the minister, “I believe that Nadef's programmatic forecasts can be largely surpassed for at least two reasons: firstly, the actions that the government has already undertaken for investments will begin to unfold their effects on GDP as early as 2019; and the recent levels of government bond yields on which forecasts were based do not reflect the country's fundamentals”.
INFRASTRUCTURE INVESTMENTS: WE WILL DEMAND FLEXIBILITY
Finally, an announcement: "It is the government's intention to ask the European Commission for recognition of its flexibility for an extraordinary investment plan for the safety and maintenance of the Italian infrastructure network, which, with the collapse of the Morandi bridge in Genoa, tragically demonstrated that it must be addressed urgently".
