Rinaldi (Lega): “I’ll explain the Recovery Fund trap”
"I would not like to be in government in April". This was stated by the former Minister of Economy Giulio Tremonti, fearing a very problematic situation for Italy for the beginning of next spring with the end of the layoffs, the term of layoffs, the tax deadlines. While the Recovery money is very far from being disbursed. A concern that of Tremonti shared by many parties. The former minister seems to dampen the enthusiasm of those who in recent days hailed the unanimous vote of the majority and opposition on the budget gap as salvific. We talked about it with the economist and European parliamentarian of the League, Antonio Maria Rinaldi.
Do you share Giulio Tremonti's concerns?
“Unfortunately, the next budget, which is very late, is based on an expectation, namely that of receiving the aid promised with the Recovery Fund from Europe. The reality, however, is much more complex than it may seem and it is useless to unload the blame for the delays on the vetoes of Poland and Hungary. The truth is another ”.
Which?
“The problem lies entirely in Brussels, where the so-called trialogue cannot be unlocked. or the dialogue between the European Commission, the European Council and the EU Parliament, or the bodies that should define the technical tools and the related details. We have reached the fifth trilogue and the results are not seen. Until a common text is signed, the ratification process by the various countries will not even begin. So the veto of Poland and Hungary is only a screen that serves to hide the reality of the facts, hide the real responsibility for the delays. Will we then be able to go through the very tight meshes imposed by Brussels in order to use these funds? A problem that Minister Gualtieri himself is posing, to the point that all the study and management of the complex process that will lead us to obtain European resources will be outsourced, i.e. entrusted to a pool of experts who will have to pay great attention to the stakes set by 'Europe. It is therefore clear that in April, if there is not a minimal recovery of the economy and the block on layoffs is lifted, we will find ourselves in great difficulty ”.
So the Recovery can we consider it almost a chimera?
“Recovery aid is designed for the implementation of medium and long-term projects with the conditionality of favoring more digital and green economies. On the contrary, at this moment we need to support the income capacity of large economic segments, from trade to tourism through catering, VAT numbers, freelancers; we need to support consumption and reform the tax system by reducing the pressure. Recovery unfortunately does not contribute to all this, so it is illusory to expect amazing things in the immediate future, besides the fact that it will have to pass a long time before seeing the resources. On the other hand, the European Parliament, pending the decisions that will have to be taken, is of the idea that at least 20% of the resources foreseen by the Recovery should be advanced to the States, against the opinion of the Commission which instead does not want to grant more than ten. We in the League are at the forefront and are fighting to get at least 20% ”.
Will the Recovery money be really useful when actually available, or will it aggravate the public debt situation as many argue by forcing us to further sacrifices and future measures of blood and tears?
“Any kind of aid from Europe will have to be returned to the last cent. I'm not saying it, the treaties provide for it, above all Article 125 of the Lisbon Treaty. The money must all be returned, either by using the contributions of the countries to the European budget, or by their own means, which translated means new taxes and service cuts. Fortunately, in this moment of great uncertainty and necessity, the ECB, in the wake of the quantitative easing policy desired by Mario Draghi, has put in place the Pepp plan, a sort of pandemic quantitative easing that from June 2020 to June 2021 around 1350 billion in circulation, destined to be increased as confirmed by President Lagarde. Without this intervention, many countries would have found themselves in the position of not being able to place the financial needs necessary to counter the effects of Covid at sustainable prices and extremely low rates. The ECB has evidently realized that without his intervention, pending the release of European aid, a disaster would have occurred ”.
So, translated for the man on the street, to what extent is Recovery really worth it?
"It suits us to the extent that there is an ECB that finally does the work that all the central banks in the world do, that is, it buys government bonds on the market, not only the primary but also the secondary one, in order to meet the financial needs of Countries with extremely sustainable conditions. This also makes it possible to keep the spread values in the euro area relatively low. As long as this mechanism is in operation, we may need the Recovery in a reduced form, while we will not have any need of the ESM funds designed to help the financial needs of the Eurozone countries that no longer have access to the markets, as happened in passed through Greece. Today, however, all countries, thanks to the support policies of the ECB inaugurated by Draghi, have access to the markets at very low rates, so the very nature of the ESM disappears. On the contrary, it would be appropriate to dissolve it definitively by modifying its aims and reforming it. There is also a proposal launched on Milano Finanza, signed by the undersigned and by Luciano Barra Caracciolo, in which the dissolution of the Mes and the use of the funds already conferred by the States as additional capital for the European Investment Bank are requested for well precise real investment. As long as these funds remain instead parked at the ECB we will also be forced to pay the negative rates, which for Italy are calculated on about 14 billion that we have contributed to the ESM coffers. A share that is anything but irrelevant ".
From Lo Speciale Giornale
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The article Rinaldi (Lega): "I'll explain the trap of the Recovery Fund" comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/rinaldi-lega-vi-spiego-la-trappola-del-recovery-fund/ on Tue, 01 Dec 2020 13:51:02 +0000.