Go on with Mario Draghi. The country-specific recommendations of the European Commission, for Italy, are above all political. The situation becomes more and more uncertain in the wake of the war in Ukraine, and then the reforms that are needed become even more essential. “Full and timely implementation of recovery plans is essential to achieve higher levels of investment” that are needed. This suggestion is valid for everyone, and especially for countries like Italy, for which the message is clear: no crisis, no tear. Because Italy cannot afford it
“Italy is experiencing excessive imbalances,” recalls the European Commission. The vulnerabilities concern high public debt and weak productivity growth, “in a context of fragility in the labor market and some weaknesses in financial markets, which have cross-border relevance”. It means that Italy can be an element of contagion for the Eurozone, if things are not brought under control, starting with public spending and the path of reforms. “The growth-enhancing effect of investment and reforms is likely to take time to develop and crucially depends on rapid and correct implementation.”
Not only. The European Commission has decided to keep the Stability Pact suspended in 2023 as well. “We are not proposing a return to indiscriminate spending”, underlines the Commissioner for the Economy, Paolo Gentiloni. Not a casual invitation. It is feared that the taps could be turned on when Italy cannot afford it, and in this Draghi represents an element of trust and guarantee. Gentiloni then sends a message to Salvini: “The Commission has no intention of slaughtering anyone in taxes.”
The recommendation for Italy is, in 2023, “to guarantee a prudent budgetary policy, in particular by limiting the growth of current expenditure financed at the national level to below the growth of potential output in the medium term”. Spend only on green transition, digital and energy security, and nothing more.
The Commission will not initiate excessive imbalance procedures given the situation. It will not take action, but Italy remains under special surveillance for its accounts. Draghi is asked to act as guarantor, for politics to let him work and work with him.