The decree arrived at the State General Accounting Office for the first time on Monday, less than twenty-four hours before it should have been approved by the Council of Ministers. It contained measures that would have entailed costs for the State, such as the one-off relief on the thirteenth salary of employees with the lowest incomes, but no quantification of them. He would have had to go to the launch not only without having identified the coverage, but without even an idea of the necessary coverage: the costs were simply not estimated. For this reason the technical offices stopped him, awaiting an evaluation.
The priorities of the economy and public finance
The rush to announce that bonus on the thirteenth grades can naturally be explained by the electoral campaign for the European elections. But the story it triggered is emblematic of a long season that many signs suggest is at the end: one in which the priorities of the economy and public finance end up subordinated to the agenda of the parties and their appointments at the polls. Not that there is a lack of other signs of the decline of this season, after long years of suspension of the Stability Pact and purchases of over 400 billion in Italian debt by the European Central Bank. There is the government’s choice not to indicate its debt and deficit objectives in the Economic and Financial Document.
The abstention of the majority parties
There is the other choice of omitting from the Def any detail on the annual spending profile of the National Recovery and Resilience Plan between now and 2026 (although the last update note to the Def had promised this). There is the choice to omit, again in the Def, any indication on the measures to finance the current expiring reliefs from next year. And there is the abstention of the majority and opposition parties in the European Parliament on the new budget rules, the same ones that the government had accepted (yesterday Prime Minister Giorgia Meloni sidestepped the issue, limiting herself to saying that the objective of the conservatives in Europe it is “to defend our nations from attempts to disempower them”).
Time is running out
All these attempts to stall reveal, in reality, that time is running out. In the summer the EU Commission will indicate the spending trajectory “recommended” to the government – decreasing in proportion to the gross product – to comply with the new rules. With the country undoubtedly in proceedings for excessive deficit, on the basis of the new Stability Pact the deficit should be reduced by “at least” 0.5% of GDP per year: around ten billion, potentially with a discount of two to keep account of the increase in interest costs on the debt.
The cost of renewing public contracts
The government argues that that correction is already built into the automatic trends in the accounts. Many factors lead us to suspect that this is not the case: from the cost of renewing public contracts, to the needs of healthcare spending, to the traps always hidden in house bonuses (this is why the head of the Europe department of the Monetary Fund, Alfred Kammer, says: «According to we, the Superbonus should be put to an end as soon as possible.”
19.9 billion in tax cuts and contributions
But there is a further factor, the most cumbersome: in the 2024 accounts the government has put 19.9 billion in tax cuts and contributions that expire in December, with the political commitment to renew them. Except that in the meantime the deficit must fall in a “structural” way. And violating the new European rules is not an option: it would prevent Italy from being able to count on the ECB’s “shield” in the event of tensions, especially this year when the government must place almost 500 billion euros worth of securities on the market. Thus the resources to be found in the autumn, between spending cuts and new taxes, would be well above twenty billion euros. For the first time the government will have to ask sacrifices from millions of voters. To the point that a quarter of the one-off tax breaks in force today will probably not be renewed.
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April 24, 2024
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