SCENARIO / Green and debt, the weapons of (Northern) Europe against Draghi

SCENARIO / Green and debt, the weapons of (Northern) Europe against Draghi
SCENARIO / Green and debt, the weapons of (Northern) Europe against Draghi

In presenting the “Spring Package”, Vice President of the European Commission Valdis Dombrovskis yesterday explained that the Stability and Growth Pact will also remain suspended in 2022.

There will therefore be no infringement procedures, but high-debt countries will continue to be “supervised” by Brussels, which “recommends” Italy to use the Recovery Fund for additional investments, to pursue a prudent budget policy as soon as possible , paying attention to both the revenue side and the expenditure side, and to prioritize tax reform and investments that support the digital and green transition.

After then the good news on the recovery side in recent days, the EU reminds us of the weight of our public debt. “Apart from that, with all the optimism about the recovery, I would not like to forget a detail that is certainly not irrelevant”, he says Francesco Forte, former Minister of Finance and for the Coordination of Community Policies.

Which?

That we still have to recover many jobs that have been lost due to the crisis or that risk no longer being there with the end of the redundancy block and the Cig. Unfortunately, it will not be easy to do so, considering the rigidity of our labor market. It is a pity that the left, which should care about work, still does not understand it.

However, growth can help us counter the burden of public debt.

Yes, even if this is not enough. In fact, it must be considered that debt has a double cost for our country. The first is given by the weight of the payment of interest on the public budget: there are not few resources that need to be allocated for this item and we do not know how long the ECB will help us to contain them by buying our government bonds. The second derives from the fact that if there is a higher public debt burden, wages must be lower than labor productivity.

Is there a solution to be able to solve this problem?

First of all, we must try to use public debt as little as possible for public investments, involving private individuals and public companies listed on the market. If the debt instead of being entirely of the State were “fragmented” so as to attribute, as far as they are concerned, a share to local authorities, the latter would not end up on the international market, thus reducing the risk deriving from speculative transactions on securities public debt, and could also be one of the targets of investments made by Italians with their savings.

What you said about public investments should also apply to those relating to the NRP?

Yes. Let me also say something about the Recovery Fund: I believe that the priority given to green projects is not determined so much by the desire to combat climate change, but by the economic interest of the countries that command in Europe in order to reconvert their industries and get an advantage.

Let’s go back to the public debt. Do you think the government is underestimating its weight?

I believe that Draghi knows very well what I have told you and that he is also a little worried about it. This is also why he insists on reforms. Undoubtedly Italy is becoming more important internationally with this government, but there are already factors that play in favor in this sense: Brexit, which has made us more indispensable in Europe, and the strategic nature of our country for the USA. in order to counter China in Africa.

What does this international importance entail?

That we are too big too fail. However, we risk becoming the South of Europe, that is, having to be continuously assisted and not being able to become autonomous.

What do you think of the proposed by Ignazio Visco at the beginning of the week to create a common European budget with the issue of debt, distinct from the previous one?

If the idea is to carry out a mechanism such as that of the Recovery Fund, the amount of resources that would be available would be modest. If, on the other hand, we intend to do something broader, we should enter into the perspective of creating a federal Europe, but I do not see countries like France and Germany willing to integrate so important that they would become like California and Virginia in the United States. .

(Lorenzo Torrisi)

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