Public debt, one hundred billion in interest in 2027
During the event “Meetings for the development of territories“, held in Bari on 13 April 2023, the President of the Abi Antonio Patuelli talks about the Italian public debt which at the end of 2022 reached i 2,762 billion pari al 145% of GDP. He also stated that it is necessary to think about public spending not only with the Maastricht parameters, which are only percentages. The public debt costs for its quantity and therefore, the same believes (rightly in our opinion), a little superficial the debate that develops on the trend of the Italian public debt only in relation to the percentages of GDP. He also claims that since 1967 the debt has grown all years regardless of the legislatures and the government majorities. In February 2023 the public debt increased by 21.6 billion compared to the previous month touching a new record amounting to 2.772 billion.
Bank of Italyin the note “Public finance, borrowing requirement and debt” communicates that the increase is essentially due to the requirement12.9 billion and the growth of the Treasury’s liquid assets, 8.6 billion, these are the most significant items.
The debt boom of the 1970s
Why does Patuelli refer to 1967? Some innovations focus on the course of the three-year period 1966-1968; the first concerns the appointment of Aldo Moro at the head of the I, II, III government, the latter was the twenty-first executive of the Italian republic, the fourth and last of the IV legislature. The revolution is basically about forming a prime Centre-left government (1962-1968). Ermanno Taviani summarizes in a few sentences the most significant aspects of the many themes that have fascinated historians in recent decades: “Italy was changing deep inside and this process required an enlargement of the ruling class and the overcoming of the development model based on low wages and low consumption of the fifties A new coalition which represented a political turning point: the partial overcoming of the cold war and the phenomena of renewal produced in the society”. In 1967 the debt/GDP ratio was equal to 32%. Debt growth in subsequent years continues to grow by about three percentage points annually. Starting from the seventies the increase continues to grow reaching in 1992 the 105%.
The reason
If the seventies had ended with a fantastic 3.5% GDP growth, the following decade closed with a growth of 2%. While the decade leading up to 2000 marks an average annual growth of an asphyxiated 1.4%. In 2015 the great recession gradually brings back 130% debt per year relative to GDP. The debt mass abundantly exceeds i 2,000 billion euros and is growing at an alarming rate. Spending on interest payments and anemic economic growth is much lower than in other countries. This should have been a warning to generations who find themselves having to pay for choices made by previous generations. We cannot ignore that this public debt it will gradually weigh on our shoulders and on ours children and grandchildren. Because the race didn’t stop, actually it got even worse and no one is able to fix it.
Per capita debt
In June 2022, Italy’s public debt, one of the highest in the world, reached 2776.4 billion, an annoying boulder that scares if you relate it to the GDP. This is how much it affects on a per capita basis. The Italian public debt divided by the number of inhabitants brings the amount of per capita debt to approx 46.900 euroif this amount is multiplied by a household of three people, the debt amounts to 140.700 euro. a shocking result. In 1967 the Italian public debt per capita amounted to approx 3.000 euro, a significant difference. The macroeconomic forecasts for the next few years are extremely pessimistic due to the aging node. Which will inevitably have an impact on pensions, health care and assistance.
The weight of interest
It is true that the debt/GDP ratio in the four-year period 2023 (144.6%), 2024 (142.3%), 2025 (141%), 2026 (140.4%) will tend to shrink significantlybut then it will start growing again from 2027 reaching 180% in 2055. The main problem for Italy is the payment of the passive interests accrued on the public debt accumulated also in previous years. The amount of interest that was paid from 2009 to 2022 is approximately 990 billion (approximately 76 billion a year). Some estimates project an amount of annual interest after 2027 of about 100 billion euros.
Avert the catastrophe
An economic planning long-term seriouscould avert a catastrophe of gigantic scope from an economic point of view, knowing in advance what will occur in the future, certainly the unknowns are many and no one has the magic wand to remedy the many mistakes made in previous years, but the Government must activate to stem a bleeding that over time will stunt growththe only element that can slow down the inexorable advance of public debt.