CERNOBBIO – The 2021 GDP could grow “more than 5.8%” indicated by the latest calculations of the Parliamentary Budget Office pending the new Istat data. And consequently “deficit and debt will be a bit better than forecasts” in April, which for this year set the two figures at 11.8% and 159.8% of GDP. But for Italy, which has reached the impact with Covid after almost twenty years of stagnation, the now inevitable challenge is to “direct the economy on a structurally broader path of growth than in the past”, a goal that can only be achieved if the a rebound in investments and we look at the impact of the measures “on 2025-30 and 2050”.
In his concluding speech at the 47th edition of the Ambrosetti Forum in Cernobbio, the Minister of Economy Daniele Franco asks to look beyond the positive situation. He asks the entrepreneurs in the audience, but indirectly also from the government partners. Because on the eve of the maneuver, the owner of the public accounts has the problem of extinguishing the easy enthusiasm of politics which will base their spending requests on unprecedented growth for post-war Italy. Because the stronger-than-expected rebound is welcome and helps shorten the time to recovery of pre-Covid production levels. But not Italy in 2019 is not exactly the goal to aim for.
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The Italian deficits
To avoid confusing the positive economic situation, which however follows the record collapse of GDP in 2020, with a structural framework to be rebuilt, Franco rattles off the key figures of the long Italian crisis. The historical series of data on productivity “is disheartening”, explains the minister, with growth rates almost four times lower than the European average in the last twenty years; the employment rate in 2019 at 58% was over 10 points below EU levels and the weight of public and private investments stopped at 18% of GDP against the average 22% of the Eurozone. To close these scissors “the PNRR is fundamental but not enough, and we must think from now on to think about what will happen after the Plan”, with a “concerted effort by the country” that must go beyond the horizon of economic policy measures. The Plan, and the community funds that finance it, are obviously a decisive spring, starting precisely with the relaunch of investments which this year mark a 15% economic recovery capable of pushing them around 20% of GDP. “It is essential that this process continues,” the minister stressed.
Towards the Nadef
In terms of the macroeconomic framework and public finance, Franco certifies the prospect of growth of around 6% evoked a few days ago by the Minister of Economic Development Giancarlo Giorgetti and also indicated by the President of the Republic Sergio Mattarella in his message on Saturday at the Ambrosetti Forum, with a deficit that could be around 10% and a debt destined to grow significantly less than the 4 points (from 155.8% in 2020 to 159.8% this year) calculated in April. “Our debt is sustainable”, reiterates the minister thanks also to an average cost crushed to 2.4% unprecedented for Italy, and destined to fall further in the coming years according to MEF projections. But “once the crisis is overcome, it will be progressively reduced, with a prudent budget policy that gradually returns to primary surpluses”.
The tax reform
In terms of economic policy, Franco’s agenda looks first of all to fiscal delegation and the law on competition. In the tax reform, expected in the council of ministers in the next 15 days, the holder of the Mef focuses first of all on wedge and personal income tax to “design a tax burden as favorable as possible to the use of the labor factor”, with a redesign of the curve which could be partially anticipated in the maneuver.