Here are the numbers of the Recovery Plan that the government is hiding
What the government says and does not say about the Recovery Plan. Giuseppe Liturri's analysis
Waiting for the outcome of the Council of Ministers scheduled for the evening of January 12 to be known and the political tangle to be unraveled (or even more intertwined), which are the major criticalities from a technical point of view concerning the Recovery Plan for Recovery and Resilience, PNRR) requested by the Commission ?
The bone of contention is represented by the Regulation governing the Resilience and Recovery Device (RRF) which, after the conclusion of the negotiations between the Council, the European Parliament and the Commission on December 22, yesterday began the process of the European Parliament to be definitively approved in the classroom in early February.
That Regulation, which governs most of the EU Next Generation funds (672.5 out of 750 billion) yesterday was approved by the Ecofin Commission with 78 votes in favor, 5 against and 13 abstentions (including the whole Lega group and Raffaele Fitto ).
The theme is highly divisive: that regulation conditions the payments of the installments of subsidies and loans to the timely compliance with all the tools that – starting from 1997 with the approval of the Stability Pact, continuing with Six pack, Fiscal Compact and Two Pack of 2011-2013 – governs the budgets of the member states. There is a coordination cycle, called the European Semester, which begins in October / November with the presentation of the Budget Planning Document and ends in June / July of the following year with the adoption by the Council of the country recommendations proposed by the Commission. .
An almost obligatory path in which the spaces for maneuver of national parliaments and governments are objectively reduced.
A toolbox that is now partially suspended but could soon return to damage our country. But we don't say this; we leave it to say to an authoritative intervention by the economist Szolt Darvas on the Bruegel.org website followed, almost simultaneously by an even more authoritative intervention by the chief economist of the OECD . In summary: those tools have done badly in the past, causing the second recession of 2011-2012 (Mario Monti's famous “bailout”), and are likely to do just as bad in the future.
Faced with this scenario, the Regulation is full of references to the European Semester, complete with respect for the country recommendations ( those of 2019 for Italy are the usual list of spending cuts and tax increases, especially on housing) and recall the procedures for excessive macroeconomic imbalances. With the essential warning that until yesterday a default on this front would have cost an infringement procedure (never started), tomorrow it could cost tens of billions of subsidies and loans that could be suspended or canceled.
An unfavorable voting position is understandable and therefore desirable (this is technically abstention). To those who voted in favor, we will return to ask in a few years – in the presence of requests for primary surpluses in the order of 2/3% of GDP, obtained with spending cuts and tax increases – on what basis they founded their consent . What considerations led them to finance an investment plan, albeit welcome and necessary for Italy, with subsidies and loans from the EU that will lead to greater future contributions to the EU budget and macroeconomic conditions that all economists consider harmful? If even the deputy of Italia Viva, Luigi Marattin, has reached certain conclusions , perhaps it is time to evaluate the effective convenience of this Plan for our country?
But, regardless of the financing methods, it is the plan itself that is about to be examined by the Council of Ministers that arouses many perplexities. One could discuss the relative weight of the different 6 missions on which it is articulated, but what is worrying is the need to respect the part that is most important to the Commission, namely compliance with the rules of the European Semester and the country recommendations . In fact, with reference to the path of recovery of the deficit and public debt, which according to article 15 of the Regulation, must be clearly explained in the PNRR, a war path is drawn that will only lead to a slowdown in growth. Concerns also arise regarding the compatibility of the PNRR with the other requests of the Commission (made both in the Regulations and in the guidelines of 17 September ) and with the now mythological and eternal reforms requested by Brussels.
We would like to be wrong, but we are afraid that when that document arrives on the desks of the bureaucrats of Palazzo Berlaymont it will cause a lot of perplexity.
But that's not the only unconvincing aspect. The Government Plan has now reached the phantasmagorical figure of 310 billion in investments, because it plans to finance them with the 209 billion from the NGEU (193 from RRF and 16 from other instruments) with 20 billion advances from the Cohesion and Development Fund ( FSC), which have always existed and which we had already reported to you a few days ago , and another 80 billion in funding from the 2021-2027 multi-year budget in the drafting phase. Money that we would have received anyway but that are deployed to " make ammuina ".
All beautiful, were it not for two decisive details that overturn everything. The funds of the multi-year budget (99 billion in total) do not come down from the sky and are not found on the markets by the EU (as is the case for the NgEU funds), but it is money paid by the Member States . It happens that Italy, out of a budget of 1,085 billion, should contribute at least 141 billion (13% based on GDP, post Brexit), with a negative balance in the seven years of approximately 42 billion . All in all in line with the negative balance of the previous budget (37 billion). The net taxpayer balance for Italy is therefore confirmed, and indeed worsens.
If we algebraically add this negative balance to the hopefully positive one of the NGEU (30 billion, i.e. 81 billion in subsidies minus 51 billion in future contributions), we would have the total net balance of our relationship with the EU in the next 7 years: -12 billion. And this in the rosiest of predictions.
Of all this, incredibly, there is no trace in the PNRR. As if in the statement of your condominium there were written only the expenses and not the contributions to be paid by you.
We only hope that in the coming weeks there will be a transparent and balanced debate on the true numbers of this journey towards the unknown (but not that much) that our country is about to undertake.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/ecco-i-numeri-del-recovery-plan-che-il-governo-nasconde/ on Tue, 12 Jan 2021 21:23:38 +0000.