The EU closes the consultations on the new budget rules. The trap for Italy is closed
The consultation of the EU experts (ie the men close to the apparatus) on the reform of the budgetary rules for the Union has ended. About half of the participants in the public consultation on the reform of EU economic governance support "country-specific" reference values for the deficit and public debt and ask for "paths" of return "that are gradual and consistent with sustained and specific economic growth for each Member State ". It would seem nice, but …
For the majority of respondents, debt reduction remains a central theme in ensuring sustainable public finances , but "maintaining and applying uniform benchmarks and imposing excessively high debt reduction requirements would jeopardize the recovery of several Member States and would risk worsening the growth gaps in the EU ”, the text highlights. Furthermore, there would be space for the creation of an "EU Budget" which should have a macroeconomic purpose and therefore serve to stabilize the European economy during the crisis.
This is bad news for Italy, despite the fact that a significant part of the experts consulted were Italian. The problem is that our academics actually live in their own world, far from the real country. Let's see the most critical points:
- first of all the “common European budget” will probably not pass because it also means creating a common stable debt, and the Nordics have already said no, several times, to this solution;
- the timing of any European intervention is so slow and delayed over time that it is useless, at best, counterproductive in the most frequent cases. Let me give a very simple example: although energy prices are skyrocketing, it will be decided in JUNE whether to change the method of calculating the price of electricity in the EU, disconnecting it from gas. An operation that should have been done IMMEDIATELY at the beginning of the energy crisis. Instead, the coffers of the electricity companies have filled up. A stimulus intervention would come, with European times, not in an anticyclical way, but in a pro-cyclical way, that is, a disaster;
- therefore the only solution for stabilization would be debt reduction. No growth, no possibility of a slow absorption with monetary resources, the only solution always remains that of positive primary balances, that is, more taxes and fewer services. A policy of progressive impoverishment even more serious now, where it has been decided to increase unproductive defense spending;
- however, the Nordic countries will oppose any concession of flexibility.
In short, nothing new under the sun. The economic space that the EU, with its rules, can reserve for Italy is about 2.1 m by 1.2 meters x 3 m, that is that of a very deep tomb.
Thanks to our Telegram channel you can stay updated on the publication of new articles of Economic Scenarios.
The article The EU closes the consultations on the new budget rules. The trap for Italy is closed comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/la-ue-chiude-le-consultazioni-sulle-nuove-regole-di-bilancio-si-chiude-la-trappola-per-litalia/ on Tue, 29 Mar 2022 10:05:35 +0000.