Here we are then \u2013 the Italian economy is at \u201czero growth\u201d, as reported by Istat in this year’s third quarter, and this will drag on to the fourth quarter and to next year, so that the expected 0.5% GDP rise predicted by the Centro Studi Confindustria research centre seems like a much more realistic rate than the preposterous 1% \u2013 even 1.2% \u2013 forecasted by the government. No recession as yet, at least (the only EU country affected is Germany, which is however Italy’s main trade partner and the country where most Italian sub-supply chains are located), though fears of a slow-down, and therefore further and greater disproportion between public debt and GDP, are certainly justified.<\/p>\n
Still, according to Istat statistics, there’s no negative impact on employment \u2013 in September 2023, the number of jobs went up by 42,000 units as compared to the previous month, and a year-on-year comparison shows an increase of 512,000, of which the vast majority (443,000) are permanent roles. \u201cPlenty of work, little GDP\u201d, is the concise comment by Dario Di Vico in Il Foglio (4 November), accompanied by \u201cstagnant productivity yet rising employment rates\u201d. Di Vico offers two possible explanations for this phenomenon, which may be engendered either by \u201cresilient\u201d companies holding on to their workforce while waiting for an impending recovery (inflation is going down, the rates will stabilise and investments will resume) or \u2013 a more pessimistic view \u2013 by a rise in low-cost, low-paid jobs, as it often happens in times of crisis.<\/p>\n
Only time \u2013 and updated figures \u2013 will tell which trends will prevail in the near future. One thing that remains unchanged, however, is the difficulty experienced by enterprises in finding the right people to fill available roles (the latest cry comes from mechanical engineering factories in the north-east of Italy \u2013 la Repubblica, 28 October). Moreover, \u2018baby boomers\u2019 \u2013 those born in the 1950s and 1960s \u2013 are now of retirement age \u2013 at a rate of half a million per year \u2013 and, according to Prometeia, \u201clooking at a period up to 2030, only 400,000 people per year are available to take their place, which means a shortage of 100,000 units per year that will not be easy to address\u201d (la Repubblica, 3 November).<\/p>\n
Yet, despite all this, Italy is a ship that sails on, thanks to the persistent and obdurate effort of manufacturing enterprises that even in such difficult times continue to produce, innovate, invest and tackle the complex environmental and digital twin transition by exporting goods and conquering new higher added-value niches in the international markets (as attested and explained in last week’s blog post).<\/p>\n
But they can’t do it all on their own \u2013 businesses are in need of wise European political decisions in line with the long-term strategies guiding the current development of the \u201cknowledge economy\u201d. Instead, what’s been introduced is a financial policy \u201cdevolving just 8% to enterprises\u201d and unable to support investments, as entrepreneurial association Confindustria has now been repeating for a long time, while the EU also failed to implement proper common policies to address both the American IRA (Inflation and Reduction Act) and the monumental investments that China made to support its own high-tech companies.<\/p>\n
Here’s the key question we need to answer to deflect a dangerous decline: how should we proceed? Marco Buti and Marcello Messori \u2013 a long-standing senior civil servant in EU commissioner Paolo Gentiloni’s cabinet and an authoritative economist in EU matters respectively \u2013 provide some good food for thought through a series of articles published in Il Sole24Ore (14 and 22 September), such as \u201cThe paths Italy must follow for a relaunch\u201d and \u201cA productive model to propel the EU into the future.\u201d<\/p>\n
According to Buti and Messori, \u201can effective integration of the European single market, which would be an asset for the region,\u201d is difficult because \u201cthe danger of stagflation has not yet been fully averted\u201d due to a production system dominated by Germany, relying on export goods manufactured through dependable yet obsolete technologies by small non-progressive companies dependant on just a few precarious energy providers (the Russian invasion of Ukraine has dramatically aggravated a glaring long-lasting issue) and on insufficiently competitive high-tech services.<\/p>\n
We are seeing \u201cEuropean delays concerning the digital sphere and Artificial Intelligence as compared to the United States and China\u201d and \u201cnew divergence risks within the EU\u201d, accentuated indeed by the \u201crelative weakness of the German economy, which is impacting those countries more deeply integrated into its value chain (The Netherlands and Italy).\u201d<\/p>\n
Basically, \u201cwithout a change of pace,\u201d the European economy \u201cmay be doomed to fall into a marginal role and its social model may progressively deteriorate.\u201d Further, \u201cstagnant demographics\u201d are exacerbating the situation, so that \u201conly if the EU succeeds in building a more competitive production system its wealth can be safeguarded.\u201d<\/p>\n
But how? \u201cWe already know what needs doing, which is at the heart of the initiative implemented in response to the pandemic shock: the Next Generation EU agreement, which entails a triple \u2013 \u2018green\u2019, digital and social \u2013 transition.\u201d In other words, the answer lies in sharing European resources so as to attain a competitive level of sustainability, strengthen the knowledge economy, and enhanced education and research.<\/p>\n
An \u201cimpervious path\u201d, no doubt, yet a necessary one, on which we can embark by \u201cconsolidating the European fiscal capacity through an efficient allocation of member states’ public and private resources.\u201d<\/p>\n
A more integrated Europe, then, without forgetting security issues and EU common funds devolved to sourcing energy and strategic raw material.<\/p>\n
Quite the opposite of new nationalist agendas whereby each single country sees Europe like a personal cash dispenser, ignoring common constraints, obligations and values.<\/p>\n
And what about Italy? Buti and Messori believe that it is in Italy’s best interest to \u201cbreak the current institutional stalemate concerning EU economic governance\u201d and approve the \u201cnew fiscal policies that, in line with the proposal made by the Commission last April, would fine-tune national budgets in keeping with each country’s individual traits and with due respect for macroeconomic growth and fiscal sustainability.\u201d These would indeed be key policies for Italy, which owing to its exceedingly high public debt has very little room for manoeuvre in terms of public funds available for productive investments and corporate incentives. Finally, the situation would also further improve through a fast approval of the ESM’s policies.<\/p>\n
Secondly, \u201cWe should ensure that significant private holders of Italian wealth provide not only liquid instruments but also activities funding production\u201d, and again, with appropriate tax incentives and a very different take on taxation \u2013 i.e. seen as a benefit to investors and manufacturers rather than as a means to facilitate tax evasion (through tax abatements) or to profit those corporate groups protected by low-cost licences and concessions.<\/p>\n
Thirdly, the considerable resources made available by the PNRR (the Italian recovery and resilience plan), which provides for genuine fiscal support, should be promptly and properly put to use. In essence, \u201conly by adopting these measures can Italy avoid getting caught into pro-cyclic fiscal policies and become part of the model for industrial decarbonisation invoked, in mid-September, by EU President Ursula von der Leyen, in her speech describing the state-of-play of the European Union. Europe, sustainable development and civic economy \u2013 these are indeed the best paths for Italy.<\/p>
(photo Getty Images)<\/em><\/p>","protected":false},"excerpt":{"rendered":" Here we are then \u2013 the Italian economy is at \u201czero growth\u201d, as reported by Istat in this year’s third quarter, and this will drag on to the fourth quarter and to next year, so that the expected 0.5% GDP rise predicted by the Centro Studi Confindustria research centre seems like a much more realistic […]<\/p>\n","protected":false},"author":1,"featured_media":98496,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[55,56],"tags":[],"class_list":["post-98579","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","category-corporate-culture"],"acf":[],"yoast_head":"\n