Italy, like the other EU countries, has sent the plan to use its part of the Next generation Eu fund to Brussels. The Commission will examine ours like the other national plans; the final decision regarding their approval will rest with the Council of Heads of Government.
NOW THAT THE NATIONAL PLANS are all available – even if not quite easily accessible – it is possible to start comparing them. And a striking surprise emerges: as has been observed (by Sergio De Nardis and Giampaolo Galli on Inpiù, by Veronica De Romanis on La Stampa) while all countries will use the grants in full, i.e. the subsidies, provided for by the Next generation EU, no one other than Italy and Greece will make full use of the resources made available in the form of loans. Indeed, in truth, all the large countries and most of the smaller ones expect not to have access to loans at all.
SO ITALY PLANS to use between now and 2026 all 69 billion in subsidies that are granted to her, and so far she behaves like the others. It plans to use the 122 billion in loans as well, and is only followed by Greece here. It even presents a plan that adds a further 30.6 billion to these resources financed in debt on the market, and is not followed by anyone here.
Obviously, those who choose a path other than that followed by all the others are not necessarily wrong. But some doubts would do well to let him come.
INSTEAD NOTHING. None of the political forces who support the government or not even the only opposition party has even just aired the idea that it would have been more opportune, wiser or more prudent to follow the path that other European countries chose almost in unison. Not only have we chosen a singular path, but we have chosen it unanimously, and without even discussing it.
IT COULD BE OBSERVED: Italy when it gets into debt on the market it pays a higher interest rate than others. If you offer them loans at a particularly favorable interest rate, such as those from the NGEU, it is wise to take them because it will save on the cost of debt.
UNFORTUNATELY, the argument can be reversed: Italy pays a higher interest rate precisely because its debt is larger. He will certainly not get out of it by making more debt today than the others. Following this path, once the NGEU is exhausted, the gap between Italy and other countries in terms of debt / GDP ratio will be wider than today, and so will be the cost of debt. For a while, things will be fine.
Everyone in the world is frightened by the economic effects of the pandemic; everyone is hoping for a quick recovery. And after all, if Italy spends to revive its economy, at least in part the positive effects will reverberate on our partners: for example, Italians will buy more German or French cars; we will be left with the debt, with them the greater demand for their products, and the greater employment that follows.
BUT, ACCORDING TO THE MAIN FORECAST CENTERS, the pandemic economic crisis will be quickly overcome, at least in developed countries. Some sooner, some later, towards the end of next year these countries should return to their pre-crisis level of economic activity.
It is not difficult to imagine that at that point everyone – partners and markets – will start looking again at the public finance situation of each one. And to behave accordingly: requiring a higher interest rate to finance those with larger deficits and debt.
HOW WE WILL GET THERE at the end of next year we can now predict with sufficient reliability. According to government forecasts, we will have a budget deficit of 5.9 per cent of GDP; the euro area average, according to the forecasts of the EU Commission, will be 3.8. We will have a public debt in relation to GDP of 156.3 per cent; the euro area on average 100.7. We will be good candidates to attract the concerned gaze of partners and markets. Let’s hope we don’t have to find ourselves complaining about the path that today, unique and alone, we are choosing.