Public accounts, the 2022 deficit jumps to 8%: the Superbonus weighs. GDP, small downward revision: +3.7%

MILAN – Double revision for the Italian public accounts, both on the deficit and on the growth of 2022.

2022 deficit jumps to 8%

On the first side, the new Eurostat indications weigh, which as expected lead to immediately accounting for the deficit linked to tax credits accrued by taxpayers for building works such as the Superbonus. In 2022, in fact, the Italian deficit/GDP ratio stood at 8% against the Nadef estimates of 5.6%. Istat itself specifies that the impact of tax credits, in particular the Superbonus, weighed on the calculation. The same item also led to a worsening revision of the 2020 and 2021 data, equal to -0.2 and -1.8 percentage points respectively. In 2020 the deficit therefore stood at 9.7% of GDP (from 9.5% estimated last September) and in 2021 at 9.0% (from 7.2% estimated in September).

The change in accounting depends on the instructions that Eurostat gave a few days ago. The point is that tax credits can be “unpayable” if there are “limits to usability”; or “payable”, where there is a reasonable certainty that the credit will be used over time in your interest. In the first case, it is registered as a minor income when it is used; in the second as an expense of the Public Administration for the entire amount accrued in the year of sustaining the subsidized expense. The overall impact is the same, but the timing profile of the impact changes. In the first case, it is diluted over the years of use of the tax credit; in the second it is concentrated in the first year. In the light of this clarification, Istat has changed the accounting treatment of Superbonus and Bonus facades from 2020, considering them both “payable”, and recorded in the consolidated account of the public administrations as expenses for the entire amount.

Growth revised downwards

On the second, that of growth, the GDP in 2022 at market prices was equal to 1,909,154 million current euros, with an increase of 6.8% compared to the previous year and 3.7% in volume. Therefore, the estimates released on 31 January which indicated economic growth of 3.9% have been revised downwards. Today’s data is in line with the estimates of the Nadef which last November had set 2022 growth at just 3.7%.

In its commentary, Istat notes that “in 2022 the Italian economy recorded strong growth, but lower than that of 2021“. Among the driving factors of the economy “was above all domestic demand net of inventories, while foreign demand and the change in inventories provided negative contributions. On the side of the supply of goods and services, value added recorded growth in construction and in many sectors of the tertiary sector, while it suffered a contraction in agriculture. The growth of productive activity has been accompanied by an expansion of labor input and incomes”.

Among the items of internal demand, clear signs of the post-Covid restart can be seen. “In 2022, the final consumption expenditure of resident households grew in volume by 4.6% (+4.7% in 2021)”, reads the Istat note. And it adds that “on the economic territory, expenditure on the consumption of goods increased by 2.4% and that on services by 8.8%. The most significant increases, in volume, are found in the following consumption functions: For hotels and restaurants (+26.3%), for recreation and culture (+19.6%) and for clothing and footwear (+14.8%). There are negative variations in expenditure on food and non-alcoholic beverages (-3.7%), on education (-1.2%) and on health services (-0.4%)”.

Downward debt

Among the updates, this time in an improved sense, also the debt/GDP ratio which fell in 2022 to 144.7% against 149.8% in 2021. The figure is better than the Nadef estimates which indicated for last year a debt at 145.7% of GDP. It remained broadly stable in 2022 tax burden on Italian taxpayers. From 43.4% of GDP in 2021, it went to 43.5% last year.