A piece of maneuver hanging from Orban and Rutte

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The accounts are done by Roberto Gualtieri in Parliament. Here are the numbers that the Minister of Economy lines up to shore up the maneuver, the next step in the government’s strategy called to inject new money into the country stunned by the virus. There are about 38 billion on the table: just over 22 billion in deficit and 15 billion in grants, the non-repayable money that the Recovery Fund will make available. But it is in the belly of this composition that there is another account to do. This time political, even before numerical. Because in Europe there is a lot of battle over Recovery. And the 209 billion put into account for Italy does not necessarily remain that way. And above all there is the problem of timing because a first tranche of this money will arrive as soon as it goes in April.

The numbers of the maneuver derive from those contained in the Update to the Document of economics and finance, the document that forms the framework. Announced on TV on Tuesday evening, presented by the Treasury owner to the Council of Ministers on Wednesday evening, the Note will be approved by the Government next Monday. A delay that more than one executive source refers to issues that are technical, of drafting, but linked to the very meaning of Recovery. In a nutshell: it took more time because this year, unlike previous ones, we had to deal not only with Covid, but above all with the estimate of the leverage effect that Recovery will be able to guarantee next year and in those to come. Gualtieri also acknowledged that taking down the Update this year was “a complex exercise”. In short, an attempt a little in the dark since the entire Recovery project does not yet have a stable system, politically and therefore also in terms of money and time.

What the Government will be able to do, to always use Gualtieri’s words, is “to detail a first hypothesis of the use of European funds over the years” and to define a “coherence” with the macroeconomic framework of public accounts. The drop point has been identified as follows: in the long term the impact on growth will be at least half a point of GDP per year more, thanks also to the boost of investments that will exceed 4% of gross domestic product.

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Apart from forecasts, there remains the element of a maneuver that has a substantial piece, amounting to 15 billion, hanging from the negotiations in Europe. Gualtieri says he is “confident” that the negotiations will be resolved positively and indeed announces that part of the projects linked to the Recovery will be anticipated in the budget law. But what will happen to the public accounts if the 15 billion were to arrive late in 2021? The minister speaks of an “integration between the resources we have already allocated”. In practice, the projects would start anyway, even if the 15 billion in the meantime did not arrive. And then the recovery money, once taken, will go to reimbursement of these expenses incurred. But where do they get the 15 billion waiting for grants from Europe to come from? The hypothesis is to pull the cord of the deficit, which this year alone reached 100 billion. In this way, the deficit would rise again, but with the recovery money it would go back down. An inflating-deflating effect with zero balance because the accounts on the deficit are made at the end of the year. The swing would therefore have a heavier effect on the accounts in the first months of the year and then rebalance from the spring, when the Recovery money should arrive.

However, the maneuver contains a more stable part, that of the approximately 22 billion that will be covered in deficit. The pressure on the accounts will increase because another 22 billion are loaded, bringing the deficit account to 122 billion, but there is still the political margin to pull the rope. These 22 billion will be used to cover non-deferrable expenses and to give a first signal on the tax front through the reliefs for hiring, the cut of the wedge and the single allowance for children. At least two billion should go to health, bringing the National Health Fund to 122 billion. The accounts, in this case, do not need a confirmation with what is happening in Brussels. For the rest, yes.

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