“Measures for the birth rate” – Corriere.it

The government will further cut the contributions paid by employees with medium-low incomes for a total value of “over three billion for the period May-December 2023”. This was decided on Tuesday by the Council of Ministers which approved the Def, the Document of economics and finance. THE three billion which will be used to “support the purchasing power of households” derive from maintaining the objective of a deficit this year of 4.5% of the gross domestic product compared to a trend (ie with current legislation) of 4.35%. The government will therefore increase the deficit by just over 3 billion, bringing it to 4.5%, to reduce the tax wedge, “with a measure to be implemented soon”, in favor of middle-low income workers. In the wake, therefore, of what was done with the latest budget law, which had confirmed for 2023 the cut of two points of contributions on gross wages up to 35 thousand euros, adding one point (for a total of three) for those up to 25 thousand euros. An overall cost operation 4.2 billion. To which three are added now.

GDP under braking

Also for 2024 the room for maneuver will remain limited. In fact, if this year’s GDP is revised inslight growthto 1% as a programmatic target compared to 0.6% set last November and 0.9% on a trend basis, for 2024 the correction is instead downwards: the growth objective is in fact set at 1.5% against the previous 1.9%. And thereThe slowdown in GDP will continue in 2025 with +1.3% and in 2026 with +1.1%. Compared to 2022, when growth was 3.7%, the economic situation marked by inflation and low growth, the uncertainty linked to the war, but also, explains the Economy, the rise in interest rates and «the emergence of localized crises in the international banking and financial system”. Moreover, just yesterday the International Monetary Fund corrected its growth estimates downwards. World GDP will grow by 2.8% this year and 3% next year, 0.1% less than previously forecast. That of Italy will increase in 2023 by 0.7%, or 0.1% more than the previous January forecasts, but less than the 1% expected in the Def. And for 2024 the IMF estimates a +0.8% against the +1.5 of the government. Whose line is defended by the premier, Giorgia Meloni, who comments on the Def as follows: «The government has outlined the economic policy for the next few years, a line made of stability, credibility and growth. Let’s responsibly revise the GDP estimates upwards and continue the process of reducing the public debt. These are the cards with which Italy presents itself in Europe». They also weigh on the modest growththe difficulties in implementing the National Recovery and Resilience Plan. So much so that the Ministry of Economy observes that “to make our country more dynamic, innovative and inclusive, the Pnrr alone is not enough. It is also necessary to invest to strengthen national production capacity and work over a longer time horizon».

Priority to family

In this context, priority will be given to the family. “From the next budget law – Meloni said during the council of ministers – the problem of demographic decline and new births must be addressed, with adequate measures”. And the Minister of Economy, Giancarlo Giorgetti, observes: «We are facing great challenges, from climate change to the demographic decline of the Italian population but also considerable opportunities to open a new phase of development. The reforms intend to rekindle confidence in the future, protecting the birth rate and families also through the tax reform which will favor large households».

Deficit and debt

Prudence on budgetary policy is dictated by the need to keep deficits and debt under strict control. It is no coincidence that the Def 2023 confirms the net debt objectives present in the NaDef (the update note to the Def 2022 of last November): 4.5% of GDP in 2023; 3.7% in 2024; 3% in 2025; 2.5% in 2026. For 2024, 3.7% of the planning framework should be compared with 3.5% of the trend deficit. This means that the government is counting on just 0.2% of GDP, i.e. about 4 billion, to finance the next maneuver in deficit. They will be allocated, says the executive, to the “Fund for the reduction of the tax burden”. Few, however, compared to the ambitious plans for tax cuts and flexible retirement ages. Reforms that will therefore have to be covered with spending cuts and revenue increases. Also on the debt front, the Def describes a downward path, which is based on the good result of 2022, when in relation to GDP the debt was 144.4%, instead of the 145.7 expected. It will drop to 142.1% in 2023, to 141.4% in 2024, until it reaches 140.4% in 2026. Results that could have been much better, observe the Economy, without the impact of the Superbonus.