Maneuver, the search for funds is complicated by the cut in GDP estimates

If the Italian economy grows less than expected, as the European Commission expects, the space to finance the next budget law will be reduced. At the moment there would only be a third of the necessary resources

Europe will grow less than expected and the same will happen for the Italian economy. The downward revision of gross domestic product estimates risks complicating the games for the financial maneuver that Rome is preparing to write.

EU: Italy’s growth of 0.8 in 2024

The cut made by Brussels, which estimates a plus 0.9 percent for Italy this year, is substantial compared to its previous formulations (-0.3 percentage points) but brief (only one decimal less) compared to what our Executive put down on paper in the spring (+1% in 2023). The difference between what the European Commission expects for next year is wider: an increase of 0.8 percent, compared to the 1.5 that Palazzo Chigi is aiming for.

Framework to be confirmed: the risks

By the end of the month the government will update its forecasts and, if the gloomier picture were confirmed, the space to find the funds would be more limited: if the GDP, in fact, increases less than expected, its relationship with the deficit will worsen, therefore the money in cash is lower than what was taken into account months ago.

Germany in recession, Italian industry worsens

Added to this is that things are also worse in Germany (the locomotive of Europe is seen in recession in 2023), on which Italy relies above all for exports. Our industry is feeling the pinch: after two months of recovery, manufacturing production went back into negative territory in July.

The unknown of ECB rates

The unknown of inflation also weighs heavily, which – although falling – is around 5 percent, and it is not clear whether on Thursday the European Central Bank will increase the cost of money again to cool the cost of living or will leave rates at the current level (4.25 percent) given the clouds over the economy.

Treasure hunt

In all of this, as mentioned, the search for resources for a maneuver that should be worth around thirty billion could become more difficult. At the moment, the available funds would be a third of the total and even a few decimals of GDP less, which are worth a few billion, weigh on the difficult task of finding a balance between the prudence desired by Palazzo Chigi and the parties’ push to keep their electoral promises .