What will happen to Italy without Draghi. The analysis of prof. Piga
The real causes of the fall of the Draghi government. The future of the PNRR. And the prospects for Italy between the ECB, Brussels and beyond. Conversation with the economist Gustavo Piga
"Europe, which today complains about seeing Italy as a potential risk for its future, must understand that this risk was largely generated by the obtuseness of its Italian bureaucrats and technicians who wanted to follow a policy economic opposite to that necessary in such a serious moment, with a pandemic, a war and an energy crisis ”.
This is what Gustavo Piga, professor of political economy at the Tor Vergata University of Rome claims, in an interview with the Subsidiary .
If Europe sees us as a risk, it is also because the spread has risen a lot in recent days.
The spread indicates how much the rest of the world trusts us. It is very interesting to note that at the time of the Conte government, before the PNRR was drafted, it traveled at levels similar to those of the last months before the government crisis, just above 200 basis points. Then it collapsed, again with Conte in Palazzo Chigi.
Because?
Because the procedure that would have led to the approval of the PNRR had begun. There was a very strong confidence that it would be the right tool to save our country, but it failed. Partly because we accompanied it with those fiscal policies we talked about earlier, partly because we began to see that the money arrived was not spent or was used late. Minister Franco, during a parliamentary hearing, explained that of the 15 billion to be used for old projects, only 5 have been spent, and we do not even know how, because there is no transparency in this regard. It is now a common rumor that the money linked to the NRP is largely in danger of spending it badly or late, going against European regulations. This is for a very simple reason.
Which?
To spend them, and well, as we have said many times, we need the mother of all reforms to have a class of public buyers, of managers of contracting stations, up to their mission. Instead we thought of managing the immense mass of PNRR resources as if nothing had happened, with the same structure that has failed in the last 30 years. The Government did not think of taking the best young graduates, paying them well, making them work as a team, throughout the territory, to better carry out the tenders for tenders. And here we are then to the point that the spread rises because the world realizes that Italy is unable to pull itself out of the economic swamp for lack of reforms and right fiscal policies.
The PNRR therefore seems to be rejected …
Leaving aside the fact that it foresees a flood of reforms, which usually should be carried out in times of economic expansion, the main point is that all this ambaradan that we have been carrying around for almost two years has not given rise to the successes it should have generated. Suffice it to note that, according to the European Commission, Italy at the end of 2023 will have grown by 1.4% compared to pre-Covid, compared to 2.8% of the Eurozone average. Thus, we find ourselves once again with a country that is relatively poorer than the others.
And without any more government .
The government fell because it failed to generate growth, opportunities and jobs. The lesson to be learned is that priority reforms must be made, not hundreds of reforms, and that, above all, abundant resources must be made available to the country to carry out public investments. The country has heard this, the politicians have warned it, there has been internal fibrillation and the government has not held up: its fall is only the acknowledgment of a failure of economic policy.
After 25 September there will still be the NRR, and the ECB's anti-spread shield has conditionalities linked to fiscal policy. It seems hard, therefore, to get out of the quagmire for Italy, whoever wins the elections.
If so, and I must tell you that unfortunately I do not give a zero probability to this scenario, let's get ready for a spread that will rise again terribly, with austerity and rising interest rates, let's get ready to find a country that will become more and more irritated by the solutions proposed by Europe, because they are unsuccessful, let's get ready to see a Member State like Italy ready to discuss, with certain majorities, a physiological exit from the euro. The risk is not small, it is already priced in the recent rise in the spread. If we continue as if nothing were compared to what this country needs to return to growth, if everything continues business as usual, disaster is just around the corner.
The ideal would be, therefore, that the new government, whatever it may be, would try to re-discuss the NRP, especially in the part relating to fiscal policy …
And it is doable. The yellow-green government managed to incredibly revise the pace of deficit / GDP reduction to help the country. I also exulted for this. Unfortunately, I then had to take note that all that freed money was squandered for Citizenship Income and Quota 100 without contributing to the growth of the economy. Freeing Italy from the bite of the Fiscal compact is a pre-condition, it is then necessary to spend the resources on well-made public investments, therefore through the mother of all reforms: the spending review aimed at spending well by inserting into the oldest public administration in Italy Europe is a flood of talented young people who are waiting for nothing but contributing to the rebirth of their country rather than being forced to emigrate.
On the European side, can we leave room for tax policies other than those prescribed for Italy up to now?
I repeat, there is a precedent: that of the yellow-green government, to which Europe eventually conceded a downsizing of austerity. It is therefore possible to modify the path of reducing the deficit, without breaking it down to 3% of GDP in three years, especially if together a credible plan is presented on how to use the greater resources available. It obviously takes great leadership, great intelligence at European and Italian level, but it is feasible. We arrived at the edge of the chasm and not because certain parties will reach the Government rather than others, but because certain economic policies that have been implemented in the last ten years by all Governments, with some that have done more damage than others, have brought us there. other.
Article published on ilsussidiario.net
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/che-cosa-succedera-italia-senza-draghi-lanalisi-del-prof-piga/ on Sun, 31 Jul 2022 05:03:29 +0000.