Giuseppe Liturri's analysis
Twenty very important days, perhaps decisive, are those that separate us from April 30th. Mario Draghi's government is called to make choices on two fronts, many close to each other: the new public budget gap to be brought to Parliament's approval and the presentation of the Economic and Finance Document (DEF) containing the guidelines for economic policy for the next three years.
Yesterday on these columns with Fabio Dragoni we launched the proposal for a gap of 100 billion, entirely dedicated to real compensation to companies forced to slow down or close due to the containment measures of the pandemic. The latest rumors speak of an ongoing tug-of-war between Palazzo Chigi and Mef around the threshold of 35 billion. We don't know how it will end.
We know, however, that beyond the Alps there is an important ally who has clear ideas about this. Yesterday, Finance Minister Bruno Le Maire announced that a deficit / GDP of less than 3%, the Maastricht threshold, will only be achieved in 2027. Yes, in 6 years, it is not a typo. After a 2020 and 2021 in which there will be around 9%, a rapid descent towards 3% is not even imaginable, says Le Maire . Indeed, the achievement of 3% by 2027 will only take place thanks to the adoption of a strict rule of growth in public spending, which must not exceed 0.7% per year. In this way it will be possible to avoid tax increases. Otherwise, goodbye goal.
A faster return trajectory is socially unsustainable. And then Le Maire plans to limit the deficit to 5.3% in 2022, 4.4% in 2023, 3.9% in 2024, 3.5% in 2025, 3.2% in 2026 and only in 2027 to fall below the fateful threshold. If Macron were reconfirmed as President of the République next year, this is practically the program for his next five-year period.
In other words, Le Maire told Commissioners Paolo Gentiloni and Valdis Dombrovskis that France goes on its own and that they can also continue with the sterile bureaucratic exercise of the European semester.
This is the result of the changed scenario in which the ECB led by the French Christine Lagarde promises to every pushed foot to buy public securities with the utmost flexibility, given that in the last three weeks it has made purchases on average, under the two PEPP and APP programs, for 23 billion (with a peak of 29 billion in the third week of March) against the 18 of the average of the previous weeks starting from the beginning of January.
This opens up an extraordinary window of opportunity for our government. Along this line, the position of Spain should not be underestimated, although it is still the fourth largest economy in the EU, whose economy has been the most affected by the crisis due to its strong exposure to the tourism sector. Three of the four largest economies right now have converging interests. An astral alignment that is difficult to replicate.
It is finally possible to build alliances that are able to effectively counter the austerity policy that has always been pursued by Germany and its satellites. We are no longer in the condition in which Merkel and Sarkozy exchanged smiles talking about Italy or in the substantial encirclement suffered by previous ministers. Fabrizio Saccomanni, Pier Carlo Padoan, Giovanni Tria and Roberto Gualtieri in the Eurogroup or Ecofin Council have never been able to touch the ball, admitted and not granted that they had wanted to.
This being the case, the ritual draft (in circulation since yesterday) of recommendations on the economic policy of the euro zone is truly an empty and anachronistic exercise, which the Council, after passing through the European Council, is preparing to adopt every year at the turn of spring. and summer.
It looks like a prehistoric document. In Brussels they only know how to repeat that "when health and economic conditions allow, a reorientation of budgetary policies towards the achievement of prudent medium-term budgetary positions, also by gradually eliminating emergency measures, will help to ensure fiscal sustainability in medium term ". Or, aware that the EU budget will require additional revenues in the coming years to repay the debts of the EU Next Generation, they hasten to underline that it is necessary " to shift the tax burden towards tax bases that are less harmful to the supply and demand for work. ".
We hope it is not a turn of phrase to carry out tax levies on real estate and financial assets, better known as "assets". On the front of the " fiscal challenges arising from the digital economy " in the EU, they are ready to proceed "even in the absence of international consensus by mid-2021" and are pushing for " greater use of environmental taxation and / or other forms of taxation. externalities ".
When this document is adopted by the Council, perhaps it will be the time when Le Maire will explain to Dombrovskis and Gentiloni that France is… France and they should see the film “ The Marquis of Grillo ”.
(Extended and updated version of the article published in La Verità)
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/come-la-francia-azzoppera-i-vincoli-europei/ on Tue, 13 Apr 2021 06:45:40 +0000.