Not just the details on the gifts that Silvio Berlusconi and the President of Russia Vladimir Putin they exchanged: the Financial Times also dedicates an article to “Financial storm” that the government of Giorgia Meloni, in the process of being formed, is preparing to face.
“Giorgia Meloni faces financial storm as she prepares to take helm in Italy”: is the title of the article in the British newspaper, published in the aftermath of the revelation of the exclusive LaPresse audio bomb, who reported what was said by the former Prime Minister and leader of Forza Italia, Silvio Berlusconi:
“Russian ministers have already said on several occasions that we are at war with them, because we are providing arms and financing to Ukraine. I cannot personally give my opinion because if it is told to the press it will turn out to be a disaster, but I am very, very, very worried. I have re-established relations with President Putin, a bit ‘a lot“.
Statements that have blown up the controversy in Italy and in the world, marking the already dented credibility of the Meloni government.
In addition to the article “Silvio Berlusconi says he exchanged gifts and ‘sweet letters’ with Putin”, the Financial Times also published a reflection on the challenges that the Meloni government is preparing to face, launching the alert “Financial storm”.
Giorgia Meloni has been defined “Former neo-fascist teen activist” that “is about to take the place of Prime Minister Mario Draghi, former president of the European Central Bank, after his right-wing party emerged victorious in the political elections ” of last September 25th.
Meloni government, FT: dilemma between debt and aid against #caroenergia
The FT presented the picture of an Italian economy struggling with “The arrival of a recession and with the surge in energy costs which is eroding company profits and destroying household incomes ” and he also presented the great and undisputed dilemma of Italy which is witnessing the risk of a collapse in consumption and which must nevertheless put a stop to its debt.
“Melons, and whoever decides to choose how minister of the economy (cite the greatest chances that the dicastery could end up being led by the Northern League player Giancarlo Giorgetti), could face problems in being able to sustain the stability of Italy’s public finances, putting the public debt – currently equal to 150% of GDP, the highest compared to any other major financial system in the euro area – on a downward trajectory , at the same time as Italians are asking for help to cope with the price spiral “, therefore in essence at #carobollette and #caroenergia.
Asked by the Financial Times Lucrezia Reichlin, lecturer in economics at the London Business School pointed out that “The new government comes at a bad time” is that “There are a lot of clouds on the horizon and not much to be optimistic about.”
On the other hand, just last week the IMF, the International Monetary Fund, warned that the Italian economy is slipping into a recession, announcing that it estimates a decline in GDP of -0.2% for 2023. The Bank of Italy, on the other hand, estimates growth next year equal to + 0.3% and inflation at 6%, in its baseline scenario; in the worst case scenario, Palazzo Koch’s outlook is, however, of a contraction in GDP equal to -1.5% and an inflation rate of 9% if Russia were to decide to close all the taps of the gas it supplies to Europe.
“It will be extremely difficult – he also commented Lorenzo Codognoeconomist, professor at the London School of Economics and former general manager of the Treasury Department of the Ministry of Economy – The country is experiencing a significant slowdown – probably a recession – and there is massive pressure on incomes due to the (surge) cost of living crisis “.
Meloni, FT remembers the phrase against ‘great financial speculators’
In this situation, what will be – the Financial Times asked – the direction that Giorgia Meloni will decide to adopt? Before the elections, the British newspaper specified, the leader of FdI had emphasized the importance of fiscal prudence, “In an attempt to obtain credibility from those who trade on Italian bonds”, or rather on BTPs, and therefore to avoid a sharp jump in the BTP-Bund spread and in the rates on Italian government bonds. Meloni, however, it was recalled, is however also the same one that he had shouted at “Big financial speculators” guilty of plotting to turn Italians into slaves.
So, in fact, after the shock report by Goldman Sachs, Giorgia Meloni wrote on May 31 last: “A few months before the general elections, Goldman Sachs says it is worried about the outcome of the polls. The American investment bank does not look kindly on a government with full popular mandate of the Italians to serve their interests, they prefer a jumble with everything and the opposite of everything in it, supported by parliamentarians ready to vote on any sale plan in order to keep the chair until the end. But sooner or later the judgment of the Italian people will come, whether Goldman Sachs likes it or not“.
A statement not exactly as a prime minister committed to keeping public finances under control. Since he won the election, the FT further noted, Meloni has admitted the need to provide “Concrete help” to families and businesses, struggling with the leap in inflation.
The question is therefore whether Meloni will adhere to that fiscal prudence which it championed shortly before the political elections and which so distinguished it from the anxiety of running a deficit of the ‘colleague’ leader of the Lega Matteo Salvini – probably to avoid a boom in the spread and rates of BTPs and thus protect oneself from the fury of the markets – or if instead will return to flag the recipes which are the basis of every movement marked by populism.
Ludovico Sapio, Barclays economist for Europe, he hoped for the new government “A balance between giving priority to growth and giving priority to fiscal prudence”, at a time when Meloni & Co are pondering whether it is appropriate to strengthen the measures adopted by the Draghi government to protect consumers from rising energy costs or whether to go even further, maintaining the promises made during the election campaign of tax cuts. In this regard, recent events in the United Kingdom, ergo the embarrassing turnaround that the Liz Truss government was forced to do after sowing panic on markets around the world, they should stop Meloni from adopting too extreme and risky measures.
“Given the circumstances, an extension of the measures to mitigate expensive energy would be appreciated, but it is also true that Italy will not be able to afford to launch an aid plan of the size that has been proposed in the United Kingdom and Germany. – explained Sapio.
Consequentially, “the new government will have to make a political decision and decide not to include interventions that could be interpreted as controversial or fiscally irresponsible “.
The Financial Times alert joins those of the rating agencies Standard & Poor’s, Fitch e Moody’s, who immediately surrounded Giorgia Meloni, after the victory of her Brothers of Italy party in the last elections. Moody’s in particular he waved the ax of a downgrade to junk, therefore of a junk Italy, while Fitch Ratings has issued a warning on the repercussions that a worsening of Italy’s public finances could have on the markets, as well as underlining the importance of PNRR, a legacy of the Draghi government. Standard & Poor’s spoke of “difficult choices “ for the Meloni government, in a context of recession in Europe e in the wake of the country’s high public debt.
Why Italy does not grow: the book signed by Codogno-Galli
On the case of Italy, at a time when after the Truss disaster in the United Kingdom the fear of becoming is spreading the new Italy of Europe, with the Telegraph which clearly writes that in Italy we no longer know what to do to bring down the public debt, in the face of an economy defined as “zero growth, stagnant” which makes the country “the one to which, among the G20 countries, less one would like to resemble ”, an explanation on the case of Italy comes with the book signed by Lorenzo Codogno and Giampaolo Galli: “Economic Growth and Meritocracy – Why Italy Wastes Its Talents and Doesn’t Grow”, recently published.
In an interview with Inpiù, in particular the economist, former General Manager of Confindustria, professor of economics at the Observatory of Italian Public Accounts, Giampaolo Galli, he expressed himself as follows:
“In the book we just published (in English with Oxford University Press and in Italian with Il Mulino. Title: ‘Meritocrazia e Crescita’), Lorenzo Codogno and I intend to alert the Italians and to say that in many areas there is a need for substantial changes of pace compared to today. The arguments are essentially the same that Mario Draghi used to justify the reforming system of the PNRR. We are more explicit and say clearly than in the last quarter of a century Italy has almost stopped growing. No other advanced country has done worse than Italy. Between 1995 and 2019, the cumulative gap in GDP growth was 32.1 percentage points with respect to France, 23.7 with respect to Germany, 29.5 with respect to the Eurozone average, 64.5 with respect to the United States. Growth is at a standstill everywhere in the country, in the South and also in the traditionally more dynamic North. In the ranking of per capita GDP of the 280 European regions, Piedmont, Lombardy and Veneto twenty years ago were close to the top places: in 2019 they had dropped to 84th, 36th and 68th place respectively, below almost all the main regions of Western Europe. The decline was similar for the southern regions and today Campania, Sicily and Calabria are at 191 °, 197 °, 202 ° respectively; all under most of the Eastern European regions ”.
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