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Questo articolo è stato pubblicato il 29 ottobre 2014 alle ore 06:50.
L'ultima modifica è del 29 ottobre 2014 alle ore 22:15.


Italy's 2015 budget, with its less "expansive" set of measures than originally intended, is now facing a test in Parliament that will be decisive for Prime Minister Matteo Renzi's government. This is the result of Rome's ongoing negotiations with the European commission, which climaxed with an exchange of letters between EU Economic Affairs commissioner Jyrki Katainen and Economy minister Pier Carlo Padoan.
A compromise solution has been finally found. Brussels had asked Rome to boost the measures to reduce the country's structural deficit, which the government had proposed to cut by 0.1% of gross domestic product (GDP), lower than a 0.7% reduction sought by the Commission in June and the 0.5% indicated in the "Fiscal compact" treaty. Renzi has responded by tweaking the budget's figures. The corrective impact on the structural balance has been increased to 0.3% of GDP, equal to €4.5 billion.

The government's decision to slash by €3.3 billion of planned tax cuts has downsized the budget's expansionary potential. As a result, any potential expansionary effect now relies on the extended €80 tax cut for those earning up to €36,000 per year, on the scrapped social security fees for newly-hired workers for three years, and the elimination of the labor component in the calculation of the regional business tax IRAP.
These are however significant measures, which the government believes will help GDP grow by around 0.6% in 2015, also as a result of the structural reforms of the labor market, the judicial system and public administration. The review of the budget figures, although confirming plans to keep the deficit below the limit of 3% of GDP, forces the government to take a further technical and procedural step: it must revise the updated Economy and Finance Document presented on October 2, followed by a new approval by the parliament.

This confirms the complexity of the regulatory framework, due in part to the European budget discipline and in part to the decision-making process in Italy. A game played between Rome and Brussels.
The outgoing European Commission, in what will probably be its last act before passing the baton onto the new executive led by Jean-Claude Juncker, will release today its valuation about those countries planning «a significant deviation» from the long-term objective (the balanced budget). Italy has decided to postpone its balanced budget target to 2017 from 2015. In the light of the new measures announced by Rome to reduce the structural deficit, the EU executive will have to assess whether the deviation «is still significant».

On the eve of the verdict, there was a common perception that Brussels will consider the 0.3% GDP correction as adequate, at least for now, despite the opening of a possible infraction procedure for excessive macroeconomic imbalances still looming on Italy. Katainen confirmed this perception on Tuesday when he said: «After having taken into account the updated information about improvements in recent days, I cannot immediately identify any particularly serious case of non-conformity» that would force the commission to entertain a negative opinion.
Formally, the decision will be up to the new commission. The analysis made by Brussels officials includes the additional resources indicated by the government to further reduce the deficit. In particular, these include the €730 million that Padoan hopes to raise by extending the "reverse charge" mechanism to the added-value-tax transactions of the large retail sector. The reverse charge discipline can be applied only if EU's VAT rules are waived, and therefore requires preliminary approval from Brussels, also called to clear the package of measures proposed by the government to fight tax evasion.

The government hopes to keep the overall budget measures broadly unchanged during the Parliament vote, which is expected to end just before the Christmas holiday recess. Changes will need to be agreed with the majority, provided that the final balance figures do not change. The draft moving to its first reading in the lower house confirms a higher deficit of €10.4 billion. According to the Economy ministry, total budget measures amount to €36.2 billion, funded for around €25.4 billion.
It should be noted that, in line with the classification by EU statistics arm Eurostat, the €80 IRPEF bonus is calculated as a major expense and not as minor revenues. Will the budget be enough to try to reverse the cycle which - as Padoan recalled in his letter to Katainen - sees the Italian economy mired in a recession for the third consecutive year? The game must be played on more than one table. It needs a strong, coordinated response from Europe, aimed at a massive dose of investments (starting from €300 billion promised by Juncker) and budget flexibility especially for those countries struggling to find the recovery path. And it also needs an Italian response, made of profound, bold structural reforms, of actions to support domestic demand and a stronger spending review, that at the moment does not seem to match expectations.

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