"There will be no need for a corrective maneuver, everything is going in the right direction". With these somewhat surreal words, spoken at the Festival of Economics underway in Trento after meeting Deputy Prime Minister Matteo Salvini in the morning in Rome, the Minister of Economy Giovanni Tria answered journalists' questions regarding the warning letter from the European Union, to which Italy will have to respond by Friday 31 May. "The response to the EU will protect against infringements", Salvini had already assured, who however also vigorously relaunched the tax amnesty and flat tax, two measures that will hardly be reconciled with the moves expected from Brussels.
“The letter from the EU was long overdue – explained Tria -, but it was rightly decided to send it after the European elections for fairness, so as not to hinder the electoral campaign. In any case, the recall refers to the failure to meet the debt target in 2018: we will explain to the Commission that this was due to a sharp slowdown in the economy, not only in Italy, and that in any case nothing can be done now because it is a final balance for the past year. As far as 2019 is concerned - Tria continued, interviewed on the stage of the Teatro Sociale in Trento - we are quite calm, we will achieve the agreed objectives". In other words: the deficit could be lower than that indicated as forecast in the latest Def (2,4%), without any manoeuvre.
“Italy's problem – admits the minister, however – is don't scare investors. In a moment of strong slowdown we are not in a position to increase the debt, we must make a conscious policy and we cannot accelerate the reduction of the debt because it would not give greater confidence to investors who must also see growth prospects". Pressed on possibility of increasing the VAT in the next maneuver in the autumn, the Economy Minister reaffirmed his position: “Anyone who knows me knows that for 10 years I have been arguing that we need to rebalance taxation, from direct to indirect. Mine is a preference for equal revenue, of tax burden, of course. First of all, we need to establish how much taxes will be and how to distribute them between direct and indirect. In any case, as you know, the Government's political line is not in favor of increasing VAT”.
However, Tria admitted that changes to VAT rules and tax reform are on the agenda, but did not go into detail on the numbers: "To be fair, I cannot anticipate the content of the response to the EU, but we will calmly explain what the factors for the slowdown in 2018 and we will confirm the objectives, which have already been agreed, for 2019". When asked about the spread between Italian BTPs and the Greek equivalent, which is dropped to an all-time low below 50 basis points, Tria didn't get upset: “The Italian economy is not comparable to that of Greece, with all due respect to Athens. The difference between the two countries is not measured only on the spread. Greece is now solving her problems, but when the Greek case exploded it created big problems for Europe ”. He doesn't even worry about the slowdown in the Italian economy, confirmed also in 2019 by the first data and forecasts: "Germany is also slowing down, indeed the distance between the two growth rates will be smaller than in previous years".
