Why worry about the Italian budget deficit, with all the upheaval that is happening in Europe, one might say… But no, it is vital that Italy pays attention to its accounts, which together with various other Euro countries will be subjected to a “infringement procedure”. If the choices of a new French government trigger a debt crisis, it will be worse for us than for others. The risk is heavy. Rejecting for now the invitations to “melonize” themselves that come from the employers, Marine Le Pen’s Rassemblement National, despite the polls placing it largely in the lead, is not scaling back its very expensive electoral program. The French public deficit, already well above the threshold of 3% of GDP, should at least go towards 6%.
In recent days, the financial markets have clearly shown that a crisis would not remain limited to France. While the French “spread” jumped from less than 50 to over 74 basis points, the Italian one went from around 130 to over 150. The yield on 10-year BTp is again close to 4%, a significant threshold if we want the debt you don’t increase over time. At the ECB, this market reaction is considered all in all to be contained. In the forecasts of financial analysts, the Lepenist electoral program will not be applied in full because the RN, even if victorious, will not have a majority in Parliament. For example, Allianz hypothesizes something similar to what happened in Italy with the yellow-green government of 2018, and the French spread at 120. All French parties see “anger” in the electorate; certainly both the far right and the new left-wing alliance want to appease it with massive doses of public spending; and the former Macronian majority also promises a lot. But is this really what is needed? Or aren’t the parties rather reacting to stimuli in the only way they know how, blindly chasing the same old recipes?
In Italy we don’t talk about “colère”, yet there are plenty of reasons to complain. The loss of purchasing power on which the French electoral programs are centered does not appear serious from the data, or is certainly less so than in Italy where wages have been stable for twenty years. The number of young people who have emigrated abroad in search of a better job in France is decreasing: here it is constantly growing. The narratives that are built on political phenomena have highly stereotyped aspects, follow fashions and sometimes reproduce clichés. For example, permanent damage from severe austerity in Greece after 2010 has been well measured, such as a decline of more than a third in education spending; elsewhere they are not present, or they are controversial. Minister Giorgetti claims that it will not be too difficult to adapt to the correction requests that the European Commission will make. This is true, if the government’s numerical forecasts are respected. The contradiction is that the government, moreover, has made numerous promises that were not included in the official figures.
Ultimately the problem remains that in the coming years it will be difficult for Italy to bear the weight of the debt if its economy does not become more dynamic, with a higher growth rate. The Bank of Italy predicts 0.6% this year, 0.9% next year, 1.1% in 2026. These are numbers – mind you – worse than those of France: they do not justify inaction.
