The recession is back dominating the election campaign. Confindustria (The Italian employers' federation) is calling for a kind of "shock therapy" to the tune of 300 billion in order to bring growth to an annual rate of at least 2%. In addition, recent data brought political leaders back to reality. The Bank of Italy has estimated a negative growth of 1% this year and the International Monetary Fund has revised downwards its October forecasts: Italy's GDP in 2013 will not be - 0. 7% but instead -1%.

This is why the economic crisis and its impact on public finances is once again back on the agenda of the candidates. There are those who soon after the election might be looking for some kind of additional fiscal adjustment, and those who won't, but in any case the battle is guaranteed.
The leader of the PD, Pier Luigi Bersani, stressed: «Finance Minister Grilli says we do not need a further corrective action. But are the redundancy funds for all firms and SMEs, in a recession like this, sufficiently covered? We have to find out". Bersani also spoke about the possibility of having to resort to a budget extra fix following the vote. He said that there is a need to understand if the technocrats have simply swept things under the carpet». Mario Monti responded curtly from Davos yesterday, suggesting for the second time «that we should not use the term swept under the carpet, not because of any negative connotation» but because «it could leave the financial markets with the impression that there is something afoot in the budget». In the interests of the country, he underlined he preferred avoiding «any misunderstanding regarding this». Monti has been arguing up to now that the fact that the economy may or may not be better or worse than expected, doesn't necessarily mean that Italy needs an additional fiscal adjustment: a cyclically adjusted budget balance will be obtained.

On the other hand, the party of Silvio Berlusconi said that some corrective action of public finances will be absolutely necessary this year. It is the PDL economist, Renato Brunetta, who outlined the reasons that lead to this: the financial repercussions of 2012 have scuppered government plans to a balanced budget in 2013 to the tune of almost half a point of GDP (0.4%), growth expected by the Monti government for 2013 is a far cry from -0.2%, and is likely to end up at around -1%; according to the PDL the country needs an extra budget fix of at least 10 to 16 billion: almost one percentage point of GDP to honour commitments to Europe.
In short, the economic crisis is back in the election campaign. The fear is that the debate on any kind of adjustment represents a manipulation of the recession for political gains. This idea is also underlined by the savage fighting going on between the prime minister and a centre-left accused of being dominated by the major Italian trade union, the CGIL.
(Traduzione di James Tierney)

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