What will change with the new stability pact

On the basis of the new rules of the Stability Pact, according to a projection by the EU Commission’s techniciansItaly should reduce its debt by 14-15 billion per year (equivalent to 0.85% of GDP). This is in case our country agrees on a budget with 4-year debt reduction commitments. The adjustment would fall to 0.45% of GDP (8 billion per year) if spread over 7 years. The latter option is for countries with high levels of sovereign debt, such as Italy, so they can handle a more gradual descent. As Francesca Basso went on to write courier, these figures are only hypotheses for the time being, as Member States will negotiate their own recovery plan with the Commission. The Stability Pact for 2023 is therefore currently suspended. But something needs to be done, because deleveraging risks holding back investment and growth. Therefore, there is a need to reform the Pact to have rules that are clearer, more flexible and adaptable to the needs of each country. If the reform finally goes through with these two options, it will mean that Italy will have to find no less than 8 billion euros, which will obviously be deducted from the funds currently earmarked for the reforms of the Meloni government. Given that the funds earmarked for the next maneuver are only worth around 6 billion (4.5 billion from deficit shifting and 1.5 billion from public spending cuts), which is among the many promises made in recent months and the many pledges that entered into during the election campaign, the reform projects that are now in danger of remaining on paper?

April 27, 2023

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