Parliament has approved the Economic and Financial Document, the text estimates GDP growth for 2024 at +1%, slightly lower than the 1.2% forecast last autumn in the Nadef. The international geopolitical context weighs on the “prudential” approach to public finances, in the government’s analysis, with the conflicts in Ukraine and Gaza and the tension in the Red Sea, inflation and high interest rates. While on the domestic side the unloading of building bonuses designed for the economic restart after the hardest phase of the Covid pandemic has an impact. This is the last Def which outlines the programmatic framework of public finance for the next three years implemented with the current methods, in fact by 30 September new common European rules will come into force which will divide the contents into two distinct documents.
Given the imminent change in the reporting system, the text approved by Parliament only includes the evaluation of the current framework, i.e. current legislation, not the programmatic one. A choice that has been contested by the opposition, who speak of a document that postpones the most important decisions regarding fiscal policy and economic planning until after the European elections. And so in this context, rather than development forecasts, between the Commission and the Chamber the focus was once again on the impact of the Superbonus and the building bonuses on public finances – in total so far 219 billion euros – with the majority denouncing the weight that would constrain public spending for the next few years and the opposition in defense of the economic leverage generated by the measure. Eurostat’s indication on how to divide the weight of the measure on state budgets should arrive in June.
“Several colleagues have contested the content of the Def, I say that it is simply realistic, in accordance with the realism that led the European Commission to ask partners to present it in this form. It is clear that waiting is better than uncertainty”, he claims the Minister of Economy Giancarlo Giorgetti. Who then continues: “Building bonuses have existed since at least 1996. But to the extent of 110% they created a monster that destroyed the conditions of public finances in these years and in the next few years to come”. Yesterday the EU Parliament approved the new stability pact, only three Italian MEPs voted in favor of the measure, while the parties that support the government abstained. Some interpreted the vote as a criticism of the owner of the Mef, who had opted for a different agreement: “It is a compromise, it is not the Italian proposal, carried out repeatedly by the undersigned, which was intended to reward investments. But when there are 27 of you arguing you have to get what is possible and reasonable. It is a step forward compared to the budget rules that would come into force next year.” Giorgetti insists: “This stability pact does not meet the criteria of those who think that growth depends on the LSD model, i.e. laxity, subsidies and debt” .
Among the unresolved issues slowing growth is the high weight of the debt/GDP ratio. From 2025, public administration debt will exceed 3 trillion euros. In 2024 the debt estimate is 2,980 billion, while for next year the figure is 3,109 billion and for 2026 3,224 billion. A period of time in which the debt in relation to GDP is expected to rise from 137.8% to 139.8%. The tax burden, specifies the Def, should fall to 42.1 percent of GDP in 2024 and then settle, again within the framework of current legislation, at 42.3 percent of GDP on average in the three-year period 2025-2027. The latest budget law was mainly focused on the extension for 2024 of the tax wedge cut in favor of incomes up to 35 thousand euros, in order to counteract the rush of inflation. A measure that cost almost 11 billion, which the government would also like to confirm in the next budget. However, Bank of Italy warned the Commission that “uA further temporary extension of social security contributions would increase uncertainty about the future evolution of public finances“.
According to Bankitalia “in introducing new incentive schemes” in the future “it will be necessary to avoid repeating the errors that have characterized some recent measures, in particular the Superbonus”
The opposition contests the content of the Def
The Democratic Party with Ubaldo Pagano talks about an anomalous Def that it omits, does not say. Giorgetti defined it as a dry Def but it is a document written so as not to harm oneself. Maybe you are waiting for the European elections, then we’ll see'”. For Luigi Marattin of Italia Viva the government must “formally commit to avoiding 18 billion in tax increases which, for next year, are currently foreseen in the Def”. According to Emiliano Fenu of the M5s “this Def does not contain the forecasts because there are European elections soon, we want to avoid telling citizens and businesses that some measures are unlikely to be extended, such as the cut in the tax wedge, or if they are extended it will be done by increasing some taxes or cutting costs for services”. While Marco Grimaldi of Avs claims that “no Government has ever dreamed of presenting a blank Def. The European vote is upon us and you don’t want to say that the next budget law already starts with a burden of at least 23 billion”.