In Europe, “attention [is] finally on the real economy” according to Arberto Quadrio Curzio in Il Sole24Ore as he expressed approval for the plans of Jean-Claude Juncker since being elected president of the European Commission. The document presenting the way forward under JCJ (his name being shortened to an acronym much to the joy of newspaper headline writers) bears an ambitious title, “My agenda for Jobs, Growth, Fairness and Democratic Change”, and Quadrio Curzio appreciates his pragmatic approach, regardless of the – now de rigueur – debate as to the essentiality of the fiscal compact (fixing public accounts before being able to think about growth), the limits of the “flexibility” in (and not of) the Maastricht parameters, and the need to reinforce industrial compact decisions to increase and improve the competitiveness of Europe’s economy and, above all, of its industry.
JCJ points to “ten policy areas” and emphasises the principle of “subsidiarity” in recalling that it is, above all, companies that create jobs (those who give credence to the quasi-Keynesian formula that gives public spending responsibility for defending and generating jobs are now on notice) and that, as Quadrio Curzio notes,
EU public funding can, and must, be used to better effect in order to drive investment in the real economy and bring about a beneficial synergy between the public and private sectors. So it is not welfare statism, although there is an awareness of the importance of the social aspects of the crisis that we still face and of the choices of a “social market economy”, but rather drivers of investment and development (along with the corollary of support for research, innovation, education and infrastructure) and with companies leading the way.
In other words, the real economy. The actions in the “policy areas” point to EU investment in integrated infrastructures (digital and broadband, energy, transport, new technologies). Quadrio Curzio underscores the strengthening of funding both through a more efficient, more effective use of the EU budget and through the European Investment Bank (EIB) and public-private partnerships, as well as through new mechanisms of business financing. JCJ has committed to presenting, by early autumn, a plan to mobilise €300 billion in investment over the next three years. As Quadrio Curzio notes, this would create infrastructurally integrated markets and greater competitiveness, especially for manufacturing, which JCJ wants to see reach 20% of EU GDP. In order to ensure that small and medium enterprise, which provides over 85% of all jobs in the EU, also benefits from this strategy for real growth, JCJ is also committed to a radical simplification of European legislation, with the hope that this will also trickle down to the national level. The inclusion of the EIB is also important in that its efficacy is to be improved (over the course of 2013-2015, it can free up as much as 180 billion in additional investment for the real economy, from infrastructures to the SMBs), and the lack of reference to the ECB is also important, which is being seen as an appreciation of its autonomy and the role it has played thus far in supporting Europe’s economy.
Europe is on the move, but what about Italy? How do we intend to be a part of JCJ’s new strategy? The numbers on Italy are still negative, with expectations on GDP growth (source: Bankitalia) being adjusted downward to just 0.2% for 2014 (as opposed to government forecasts of 0.7%). Competitiveness is declining due, above all, to the lack of foreign investment, the burden of taxes, the complex, opaque legislative and bureaucratic landscape, a lack of services, and the loss of jobs (Italy’s economy has slipped six places in two years in the rankings of the World Competitiveness Center of the Institute for Management Development (IMD) in Lausanne, dropping from 40th to 46th place and far below Germany, France and even Spain and Portugal). Manufacturing and services are stagnant (according to Mediobanca’s R&D surveys of the accounts of Italy’s leading corporations). Industry isn’t firing on all cylinders, and export growth for the leading firms is clearly not, on its own, enough to offset a crisis that is clearly still under way (and having serious repercussions on jobs and on income).
And the government? They have announced a plan to revitalise Italy that includes efforts to increase investment and to promote the sort of quality Italian manufacturing that the world expects from us. “If we work hard on the offering, we’ll have twenty years of real wellbeing before us”, predicted a confident Carlo Calenda, the deputy minister for economic development, looking mainly to gain strength in international markets. And so more investment, more innovation, more internationalisation, less bureaucratic complexity (and less corruption, which is a major obstacle to a sound, competitive economy).
JCJ’s plan is a good European framework within which to include the renewal and revitalisation of Italy’s economy. The best companies (a few thousand of the larger corporations that drag along the smaller ones) are already thinking in these terms. Italy’s culture of enterprise is one of innovation. It is a challenge for all policymakers and for public administration, and it is one that we must not lose.