GDP, boosted by 45 billion in three years: here is the double movement of the government on the Recovery Fund

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The 1.3 additional points of GDP deficit spaces will also be used by the budget law to anticipate investments later financed by the Recovery Fund, with a kind of bridge that will act in the first place on the relaunch of Industry 4.0 in the version “plus” and boost to public investment. And to avoid the risks associated with the possible rejection of interventions that request financing, the idea of ​​preparing “bank projects”, called to take over in the event of an EU shutdown, is being studied.
A double movement, the one studied by the government for the maneuver, which serves to support a bet of 45 billion in extra growth in three years: an ambitious but essential bet to reduce a debt now to 158% of GDP.

The additional growth foreseen by Nadef must come about through a combination of expansionary measures and EU aid. In a plan that, in the period of action of the Recovery Plan, intends to bring public investment above 4% of GDP, that is, to a level almost double with respect to recent years. The shot is measured by the figures indicated yesterday by the Minister of Economy Gualtieri in the hearing in the Senate on the guidelines of the Recovery Plan. GDP, as anticipated in recent days, should grow according to schedule by 6% next year, 3.8% in 2022 and 2.5% in 2023.
Unprecedented rhythms in the recent history of Italy, which since 2000 has not experienced an annual growth of more than 3%. And children of the dragging effect of the expected rebound for next year, but also of a powerful expansionary effect hypothesized by the government.

To measure it, just look at the distance between the growth trend, which “with unchanged policies”, and the one planned thanks to the next measures: this range, normally limited to a couple of decimal places, is worth 9 decimal places next year, 8 than next and 7 in 2023. In accumulated terms, it indicates an additional production close to 45 billion in three years.

The debt forecast

This boost is necessary to immediately trigger a reduction in post-Covid maxi-debt, which from 158% of GDP this year would drop to 155.6% next year and 151.5% in 2023, to return. according to Gualtieri “below 130% at the end of the decade”. And the continuity in the years of the expansion that the Mef foresees is explained by the effects attributed to the EU Next Generation funds, of which Nadef will indicate a first calendar of use in 2026. But in the first two years it will also be needed an important part of the additional deficit, 1.3% of GDP in 2021 and 0.6% in 2022, postponing the first adjustment (of 0.4% of GDP) to 2023. The deficit serves first to cover a series of Indispensable measures, from health care (we’re talking 2 billion) to schools, from the confirmation of the gap (another 2 billion) to cuts for new hires and social safety nets.

The critical point lies in the moment of implementation

But a part will be used to “anticipate” the effect of the EU funds. Because the most critical point is obviously represented by the time necessary to start financing and carry out projects. Times that must hasten to dismiss the very serious blow that the pandemic brought to the economy and public finances (the need for the first 9 months of the year reported by the Mef is 128.2 billion, 73 more than in 2019, after 21.9 billion in September, a slight improvement over 22.8 in October).