Move, Bank of Italy: «With relief from work the balance of the pension system is at risk». The PBO: “Lack of information on costs and coverage”

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“Regarding the broad measures described, if more information is needed about a completed assessment, the intention to relieve social security contributions at work becomes relevant. As already indicated at the hearing on the DEF, the balance between contribution income and costs would be for services that, in the medium term, characterize our social security system and represent one of his strong points have been lost on an absolute scale”. So Sergio Nicoletti Altimari, Head of the Department of Economics and Statistics of the Bank of Italy, in a hearing before the Budget Commissions of the Chamber and the Senate on the Structural Budget Plan.

With Istat revision, GDP in 2024 is 0.8%

“In the framework of the PSB forecast under the current legislation, GDP will grow by 1.0 percent this year, 0.9 percent next year and 1.1 percent in 2026. A review of the quarterly economic accounts would was published last Friday by Istat, which is not included in the framework, meaning a mechanical downward correction of two tenths of a percentage point of the estimate for this year,” said the head of the economics and statistics department of the Bank of – Italy.

It is possible to achieve the effect of the move on GDP

The measures in the budget, including the stabilization of the tax rate reduction, and the interventions to support larger families “will show their effect mainly in 2025, increase GDP growth to 1.2%. The expected effects are in principle possible to achieve, but a more complete assessment requires information that is not yet available” on specified resources and methods of implementation, affirms Sergio Nicoletti Altimari.

Encouraging accounts but PSB is not risk free

“The accounts throughout the year show an encouraging trend”, but “the program described in the PSB is not free from risks” explained the representative of the Bank of Italy, at a hearing on the PSB. The first risk is that, in order to finance part of the transition, the plan “uses the margin determined by the maximum income now expected for 2024, with the assumption that they are completely permanent”. Second, given the “high uncertainty” of the macro picture, “even small deviations from budget plans could make it difficult to bring the deficit below 3% in 2026.

There are insufficient details of the reforms in the PSB

Regarding the reforms identified in the Psb, “it would be desirable for the plan to provide a more detailed level of the times and methods of implementation,” said the head of the economics and statistics department The Bank of Italy, at its hearing in Parliament on the PSB. For Altimari “there is not enough detail in the plan for a complete assessment of the interventions planned in it, especially the law framework on SMEs and the measures aimed at strengthening capital markets. They must be based on a correct identification of the main factors that hinder the growth of companies, including the dis- benefits arising from the regulatory framework and the tax system”. “A prudent approach to public finance management must be combined with strong reform and investment action, to increase growth potential. On this front, the document identifies areas that are appropriate for the prospects for the Italian economy in the future. Much will depend on how the reform measures are designed,” he said.