The Italian government of Giorgia Meloni poses as a herald of budgetary discipline by posting ambitious objectives on Friday to curb deficits and does not hesitate to call on large companies to bail out public accounts.
The right-wing and far-right coalition plans to reduce the public deficit by 2026 to 2.8% of gross domestic product (GDP), well below the 3% ceiling set by the European Stability Pact.
Thanks to increased tax revenues, Rome intends to reduce the deficit to 3.8% of GDP this year, against 7.2% in 2023, a more ambitious objective than the ratio of 4.3% envisaged in the last forecasts in April.
These commitments appear in the seven-year recovery plan for public accounts, illustrated in the Council of Ministers by the Minister of the Economy Giancarlo Giorgetti, which Italy must send to the European Commission.
Targeted by a European procedure for excessive deficit, like six other member states, Italy explains in its plan how it intends to get back on track from 2026.
Italy thus shows itself to be more virtuous than France, another country singled out by Brussels for the drift of its deficits.
France’s deficit risks exceeding 6% of GDP this year, worse than expected and far from Brussels’ expectations, said the new French Budget Minister Laurent Saint-Martin.
– “Serious and careful” –
The Italian deficit reduction plan “adopts a serious, prudent and responsible line and is a continuation of the action that the government has been carrying out since its beginnings”, assures Giancarlo Giorgetti.
Rome aims to reduce the deficit ratio to 3.3% of GDP in 2025 and to 2.8% in 2026, “which will make it possible to exit the excessive deficit procedure”, he notes.
But Italy’s enormous debt ratio, or 134.8% of GDP in 2023, is expected to continue to increase before starting to decline from 2027.
In question, very generous green bonuses for construction launched in 2020 by the government of Giuseppe Conte which continue to weigh on the accounts.
The Meloni government is struggling to complete the 2025 draft budget and finance certain electoral promises, including tax cuts for low-income earners and measures to boost the birth rate.
Reduction of deficits requires, the budget promises to be very tight and should contain measures worth around 25 billion euros, the cost of which should be partly offset by cuts in spending.
Italy plans in its plan an average increase limited to 1.5% per year in its net public spending over the recovery period.
– Contribution from companies-
In search of new resources, Rome requested a “solidarity contribution” from companies that have reaped large profits, such as banks, insurance companies and even energy groups.
“We are asking for a contribution from everyone who can afford it, seeking together the best way to achieve the objectives,” Mr Giorgetti said on Wednesday during a meeting with social partners.
However, there is no question of introducing a new “tax on excess profits” from banks, assures the minister, who is seeking to negotiate with them ways to voluntarily contribute to public finances.
The Italian Banking Association (Abi) has already shown itself ready to play the game and take the plunge, but has set its conditions.
“These measures should be of a temporary and predetermined nature, with exclusively financial effects, safeguarding the assets and balance sheets of banks and without retroactive effects,” she said.
Giorgia Meloni attracted the wrath of the business world in August 2023 with a 40% tax on banks’ “excess profits”, announced amid the greatest confusion and amended twice in 24 hours.
After a panic on the Milan Stock Exchange, the government reversed course and significantly watered down its project.
Rome had given banks the option of increasing their reserves instead of paying the tax. Result: this tax brought zero revenue to the Italian Treasury.
Do you have a real estate project in mind? Yakeey & Médias24 help you make it happen!
