The draft of the 2022 Budget Law sent by Italy to Brussels on 20 October last was promoted by the European Commission, which, however, in its judgment he invited the country to set itself the goal of reducing the increase in current public spending, taking into account the high public debt: Italy does not plan to limit sufficiently the increase in current expenditure financed with national resources, to contribute to the pursuit of a prudent fiscal policy, the Commission invites Italy to take the necessary measures within the process of budget to reduce it.
The Stability Pact suspended
Quantitative but only qualitative observations were envisaged, the Stability Pact suspended from 2020 and despite the uncertainties also due to Covid it is likely that it will actually return into force in 2023 as said by the vice president of the EU Commission, Valdis Dombroskis, during the presentation of the European Semester package, in which he explained that Brussels will carry out in-depth analyzes for the nine Member States already identified with imbalances – Croatia, France, Germany, Ireland, the Netherlands , Portugal, Romania, Spain and Sweden – and three with excessive imbalances: Cyprus, Greece and Italy.
When asked whether the Commission expects a containment of spending already in the economic maneuver for 2022, the EU Commissioner for Economy Paolo Gentiloni replied at a press conference: it is quite clear that we are not asking for specific corrections, we have only drawn attention to the problem of something that the government intends to address: how and when it will be an Italian decision. Italy in shape, is facing the vaccination campaign well, has good growth figures – added the commissioner -. Although we have talked about the current expenditure speech, we already do so in the June recommendations, but this is an important issue for those with high debt.
Covid and inflation fears
Gentiloni reiterated that the European recovery strong but subject to considerable uncertainty. The resumption of infections and the increase in inflation, which will probably increase again in the coming months, before starting to decline in 2022, disturb the scenario. The resumption of Covid and the consequent restrictive measures will have a certain impact on our economies – he said – especially on high-contact intensity services, but the Commission does not expect them to have the same impact on economic activity as last winter’s lockdowns.
The recovery not to be hindered
The next challenge will be to reduce debt without compromising the recovery. And for highly indebted countries, debt relief must be realistic and credible, Dombrovskis said: Ways must be found to ensure that debt relief policies do not hinder recovery. This is a fundamental starting point in the discussions that have begun on the revision of the Stability Pact, which will materialize after the presentation of a proposal by the Commission in the spring.