In government and especially in Ministry of Economythere are at least two options discussed in a more or less hidden way. Both take into account the scenarios of the coming weeks, when a far-right government or a technical executive without a majority could form in France, just as Paris and Rome become the special observers of a deficit procedure Bruxelles and the financial markets are prolonging — potentially — the same fibrillations seen in the last twenty days.
Of course, this morning the tension in the markets could ease a little, because the possibility of a left-wing government in Paris with its enormous spending plans is more distant. But the more traditional option, forItaliait remains to put oneself in the shadow of the France. If the next government in Paris were to obtain a Bruxelles some (implicit) concessions regarding the strict request with the next budget law, Italy could hope for an almost equally favorable treatment. In fact this is already the government line, despite the tensions between the Prime Minister Giorgia Meloni and the French president Emmanuel Macron. We saw it last autumn: the French government proposed a deficit target of 4.4% of gross domestic product for 2024, and Italy consequently set its own at 4.3%; the idea was to aim for the highest possible deficit that would remain just below that of Parisso that no one could deal Roma as an extreme case.
Reality has made this relative caution superfluous, because Paris’ deficit for this year is now running at at least 5.3% while Rome’s could perhaps even be below 1. 4,3%. But the model remains: with unchanged policies today, the French deficit is decreasing slightly in 2025 and if the EU Commission asks Paris for only a minimal effort, the Ministry of Economy in Rome could ask for similar concessions. This would certainly help the government to close a budget law for which, on paper, resources of around twenty billion need to be found. But then there is a second option for theItaliadiscussed (discreetly) in the Ministry of Economy. It provides for a full, convincing budget correction, that is, to apply the new Stability pact. Without caring about any hesitations from Paris.
The objective in this case would be to send the message to the markets that theItalia it’s not there France, but stands out for the better. It would be the same message as the Spain and the Portugal have given to distinguish themselves from Italy in the last three or four years: they have not followed the delays of Romabut they took advantage of it to show the differences. And Madrid e Lisbon have been rewarded with a much lower interest cost than that which weighs on the entire Italian economy. Now the same opportunity presents itself to Italy with respect to France. The technical structure around Giancarlo Giorgettiat the Ministry of Economy, is tempted to seize it.
He certainly spoke to the minister about it. It remains to be seen whether Giorgetti himself spoke to Melons and if politics does not instead think of following in Paris’ wake. It could be dangerous. Precisely at this stage in the European Central Bank we are wondering how to intervene to calm any tensions, triggered by France in the coming weeks. The ECB rules allow targeted purchases of securities under attack, in the case of countries under deficit procedure, only if the governments involved apply the recommendations of Bruxelles on the accounts. It will be another discriminating factor – also for Italy – if a conflictual cohabitation between the president Emmanuel Macron and a far-right government will produce market tension. This is also why it would help if the Meloni government remained constructive, towards the EU Commissioninstead of multiplying misunderstandings. Giorgetti knows it. The rest of the government is much less clear.
