Because it will not be only the Recovery Plan that will raise Italy: a fiscal shock is needed
If consumption languishes, there is no industry or economic activity that can survive. And then a little thought on the excess tax burden, the backbone of the country's administrative structure, must be done. Because it will not be (only) the Recovery Fund to revive Italy. Gianfranco Polillo's analysis
The good Gualtieri, from Via XX Settembre, will be able to make all the necessary attempts. He will be able to mediate between Matteo Renzi, the only one who seems interested in the contents of the Recovery Plan and Giuseppe Conte who looks more at the format of the final document, than at the choices to be made.
At the beginning, as will be recalled, he even contracted them out to a "technical structure" capable of bypassing any political decision. Then the ball will pass to Vincenzo Amendola, who will have to deal with the European Commission: ready to nitpick, if only so as not to further irritate the various Mark Rutte, who have long been on a war footing.
Will it be a rewarding effort? Will that plan, once all the necessary stamps have been obtained, be able to determine the turning point that everyone is anxiously awaiting? Frankly we doubt it. In the best of hypotheses it will be a good calligraphic exercise, which will allow you to spend some money – a little in debt and a little at the expense of Europe – but it will hardly be able to determine the restart that many are longing for. Excessive pessimism? The opposite is to be hoped for, were it not for the risks that letting go could fuel.
The delay in preparing the Plan is so evident that it does not need to be further stigmatized. Better to ask why. Where does his continuous rewriting come from? From an excess of zeal? From a contrast, within the government, between different hypotheses? From the need for a sort of preventive agreement with Europe, whose guidelines are simple guidelines and not the sort of gospel that some would like. How easy it is to unload one's inability to decide on others. The truth is what has been told. At first it was just a jumble of warehouse funds. Old ministerial programs forgotten in the drawers and revived for the occasion. Many of which have already been contemplated, as unlikely trophies, in various legislative measures.
Top secret: these were the instructions given to the various insiders. The fear that someone would find out what was under that dress. Mission, as always happened in Italy, proved impossible. And then in front of the chorus of criticisms, here is the next operation of cut and sew. Programs shrink as if pressed into a vise. Change the relationship between the old and the new. In other words, the weight of stock funds is contained and new solutions are hypothesized. According to what is known, the funds for health care are increasing (always a fraction of the availability offered by the Mes ), bonuses are being limited and public investments are growing. The Mezzogiorno achieves the target of 40 per cent in the distribution of expenditure.
We will see better when the final document will finally come to light: government crisis permitting. There is, however, one question that remains unanswered. What are the context data? How can this program and does it want to interact with the real situation of the country? If you do not start from here, as was the case in the days when people tried to program against the will of so many "strong powers", it is just an academy. It can be used for some small or large coastal operations, but forget that this approach can bring about that change which would also be indispensable.
Yet it would not be difficult to identify some trends. In the great and small tragedies that have marked the history of recent years, there are also moments of light and hope. It was not even necessary to look for them with Diogenes' lantern, as they are available in the large databases of the main international institutions. We used Eurostat data, but we could have called into question the OECD or the IMF. No difference: the important thing was and is the method of analysis. Above all, the comparison in the dynamics of the large aggregates of the main European countries.
There is a fact that stands out immediately in the long-term trends. Italy – it is no mystery – in terms of GDP growth, it is the last wheel of the wagon. In the group of leading countries, from 2008 to 2019 it loses two percentage points: from 17 to 15 per cent of Eurozone income. France and Spain also lose something, but much less than half. Germany and Great Britain, especially the former, on the contrary, see their loot increase. So far nothing new, if not the confirmation of a well-known trend.
The novelty lies instead in the data relating to the trend of industrial production. In this case, in fact, compared to competing countries, not only is there no trace of a crisis. Obviously specific. But in the gray of a general trend that has certainly not warmed the heart, Italy does best of all. With the 2015 industrial production index made 100, in 2019 the Italian result was 105.2, against a Eurozone value of 103.9. In this context, only Spain did slightly better: 106.0. A slight overtaking that was recovered during the first ten months of 2020. Italy, in the lead of all, ranks at 99.87 (100 the December 2019 index). The Eurozone at 98.69. Spain at 98.54. Germany at 96.63.
The reason for this apparent anomaly can be seen in the dynamics of international trade. Once again, among the major countries, Italy boasts a small record. Outclassed only by Germany and in line with the Eurozone average, in turn conditioned by the prevailing weight of the German economy. In 2019 the export / import ratio, according to Eurostat, was equal to 1.09 for Italy, against 1.10 for the Eurozone. Second only to Germany. Of course there are countries, such as Denmark, Holland and Luxembourg, characterized by an even greater dynamism – which explains their preference for "frugality" – but their combined national income is just over 60 per one hundred of the Italian one.
What conclusion to draw? In spite of everything, the Italian industry does not miss out on foreign competition. An infrastructure, therefore, far from needing the pitiful doctor. The exact opposite of what is happening in the rest of the country. Which creates a question that deserves an answer before embarking on the fancy flights of the Recovery Plan . Perhaps one of the causes is to be found in the massacre wrought by economic policy in recent years on domestic demand.
If there is no consumption, there is no industry or economic activity that can survive. And then a little thought on the excess tax burden, the backbone of the country's administrative structure, perhaps should be done. By placing the theme of its overall reform at the center of reflection. Europe permitting or not. But what interest would the latter have in denying the evidence?
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/perche-non-sara-solo-col-recovery-plan-a-far-rialzare-litalia-serve-uno-choc-fiscale/ on Thu, 07 Jan 2021 12:13:13 +0000.