In a move that has raised concerns about the future of public finances, Parliament has approved the Economic and Financial Document. The document forecasts GDP growth for 2024 at +1%, slightly lower than the 1.2% forecast last autumn in the Nadef. The government’s “prudential” approach to public finances has been influenced by a number of factors, including conflicts in Ukraine and Gaza, tension in the Red Sea, inflation, and high interest rates.
The focus of debate in recent months has been on the impact of the Superbonus and building bonuses on public finances, with concerns about the weight constraint that could limit spending for the next few years. The majority has denounced this constraint while the opposition defends it as an economic leverage that will help boost growth. Eurostat is expected to provide guidance on how to divide the measure’s weight on state budgets by June.
Despite these efforts, there are still concerns about uncertainty regarding future public finances. The high debt/GDP ratio is seen as hindering growth, with public administration debt projected to exceed 3 trillion euros by 2025. To counteract this, tax cuts have been introduced under the latest budget law, which is expected to reduce it from 42.1% of GDP in 2024 to an average of 42.3% over the next three years. However, discussions continue about avoiding tax increases and ensuring that measures like tax wedge cuts are extended beyond 2024.
The involvement of European elections adds complexity to decision-making and there are concerns about how unresolved issues will impact future budgets. Critics have also criticized the document for its lack of forecasts and delaying important decisions regarding fiscal policy and economic planning until after European elections are held.
Overall, this document marks a significant moment in shaping Italy’s financial future over the next three years under current methods.
Parliament has approved a document outlining its programmatic framework for public finance over the next three years under current methods.
This document is seen as an important step towards ensuring stable public finances despite challenges such as inflation, high interest rates and geopolitical tensions affecting global economies.
However, criticism has been directed at some aspects of this document such as its lack of specific forecasts and delaying important decisions until after European elections.
In particular, there is concern about how unresolved issues will impact future budgets.
The focus between Commission and Chamber is on addressing issues such as Superbonus and building bonuses on public finances.
