RIMINI (ITALPRESS/MNA) – “The crucial problem remains the reduction of public debt in relation to the product. High debt makes financing for businesses more expensive, slowing down their competitiveness and incentives to invest; exposes the Italian economy to the erratic movements of the financial markets. It takes resources away from counter-cyclical policies, social interventions and measures in favour of development. Italy is the only country in the euro area where public spending on interest on debt is almost equivalent to that on education. I highlight this comparison because it is emblematic of how high debt is weighing on the future of young generations, limiting their opportunities. Addressing the debt issue requires budget policies oriented towards stability and the gradual achievement of adequate primary surpluses”. This was stated by the governor of the Bank of Italy, Fabio Panetta, while he was speaking at the Rimini Meeting.
“Debt reduction will be difficult without accelerating economic development. The right direction is prudence in the management of public finances, accompanied by a decisive increase in productivity and growth. This virtuous circle would significantly increase the chances of success and strengthen the credibility of our policies, and lightens the burden of interest expenditure”, added the governor, while underlining how “the discussion on the” European “rules is not the most important one; we must not reduce the debt because of European rules, but because it is appropriate to do so. Debt is sustainable but if it is so high it leads to inefficiencies and forces us to spend money to deal with past mistakes. Therefore the need to reduce debt is independent of European rules.”
Panetta highlighted the “signs of vitality” for the Italian economy and this progress allow us to look to the future with confidence. “Without indulging in excesses of optimism, we must start to build sustained, lasting and inclusive development. Growth remains the fundamental objective for Italy, but to achieve it we must decisively address the unresolved structural problems.”
He referred to the Recovery and Resilience Plan. “I believe there are the conditions for the RRP to have positive effects on the Italian economy. From 2021 to 2026 it will have an effect of 9% on the GDP due to demand, the potential income will be 4% higher.” He added, “these are estimates subject to high uncertainty. For example the impact will depend on the quality of the reforms, on how much we will strengthen competition, but I believe the conditions exist to have a persistent and potentially permanent effect on the Italian economy. What is important is that the RRP indicates a system where the State intervenes with investments and reforms. If this becomes the way, the effects will be greater”.
Fabio Panetta spoke at length about Europe, recalling how over time European integration “has brought important benefits to citizens. The abolition of internal customs tariffs has favored productive specialization and the creation of economies of scale, stimulating efficiency and competition and increasing employment and enhanced the well-being. It is estimated that in the absence of the single market, the income per capita in Europe today would be one fifth lower.”
He underlined, “to overcome its weaknesses and keep pace with global progress, the European Union will have to initiate profound reforms and make huge investments in the coming years. Among the reforms, I have already underlined the importance of creating a common fiscal capacity, without which the current European governance – characterized by a single monetary policy and fragmented budgetary policies at the national level – remains unbalanced. The idea that the EU can function effectively without centralized fiscal capacity is simply an illusion, and must be overcome. A common fiscal policy would correct this imbalance and strengthen cohesion between member countries, facilitating the realization of large-scale strategic investments. European authorities now have the difficult task of ensuring prosperity for citizens in a less stable and less open world. This goal requires progress in multiple directions. First of all, it is essential to continue the path of integration. A test bed for the new European legislature will have the ability to confirm the use of common spending projects and to advance towards a more complete and more integrated union on both a financial and fiscal level”.
The governor of the Bank of Italy also touched on the topic of the demographic crisis, recalling that in the coming decades “the number of European citizens of working age will decrease and the number of elderly people will increase. This dynamic risks having negative effects on the stability of pension systems, on the healthcare system, on the propensity to undertake and innovate, on the sustainability of public debts. To counter these effects, it is essential to strengthen human capital and increase the employment of young people and women, particularly in countries – including Italy – where the gaps in participation in the labor market by gender and age are still too wide. Measures that encourage an influx of regular foreign workers also constitute a rational response on an economic level, regardless of other considerations. The entry of regular immigrants, he observed, will have to be managed in a coordinated manner within the Union, balancing production needs with social balances and strengthening the integration of foreign citizens into the education system and the labor market”.
Finally, he referred to the European Central Bank policies. “The ECB’s restrictive policy occurred due to the flare-up of inflation. Its intervention prevented this flare-up from becoming persistent, obviously it had some effects: it reduced inflation and slowed down growth, but the end of the restriction has already begun. I believe it is reasonable to expect that we are moving towards a phase of easing of monetary conditions”, concluded Panetta, therefore hoping for a rate cut on interest rates.
The discussion was introduced by Giorgio Vittadini, President of the Foundation for Subsidiarity. For Vittadini “we cannot think of development” if we do not discuss “how to relaunch productivity, the relationship between the product and the people employed. If we are not able to carry out this type of structural intervention, we can enjoy all the contingent interventions, including the RRP, but we must also ask ourselves how to make a leap”.
He stated, “We are in a moment of transition: from the financial economy to another idea of ??economics in which we talk about sustainability and mistakenly think that it is only the issue of climate change”. Instead, for Vittadini, “there is much more”, that is, “the idea of ??putting the human development and a real economy back at the center of economic life”.
– Photo xb1/Italpress –
(ITALPRESS).
