Italy will offer a new economic stimulus plan

According to two government officials, Italian economy will approve a package of policies costing more than 9 billion euros.  On Thursday in order to reduce energy costs, boost gas production, and maintain stockpiles before the winter. More than half of the funds will be used to extend until the end of the year tax reductions and subsidies for low-income households. Also for the energy-intensive businesses that were put in place by the previous administration and supported through November. According to the officials, a reduction in gasoline excise taxes that was set to expire on November 18 will also be continued through December.

Regarding energy security, the package will allocate 4 billion euros to increase gas storage. This is  in advance of the winter. By allowing the state-owned Gestore dei Servizi Energetici (GSE) to maintain some strategic stockpiles. The ones they bought in the second half of this year. Rome had previously agreed to provide the GSE with 4 billion euros. This is so that it could purchase gas.  Sell it to businesses before the end of the year. Finally then pay the Treasury back with the proceeds. The government is now stating that the GSE can keep the gas for its inventories. They can repay the loan next year as a result of the drop in gas prices. The goal is for the fiscal gap to close to 3% in 2025.

Italian economic growth ceased roughly 30 years ago. The decline is more obvious now than ever before. There are very little family funds. They can no longer support the expenditure. The “competitive devaluation” of the lira to support exports, primarily of manufactured goods, has been damaged by the Euro.

More about the Italian Economy

Large family-owned businesses formerly contributed to some of the growth.They have moved their focus to public or semi-monopolistic industries. This is because of in search of protected revenue on the domestic market. This as opposed to risky expansion and innovation. Smaller businesses have faced pressure from global competition and high domestic taxes without receiving any infrastructure help from the government.

Governments have been unsuccessful in enacting meaningful change in the labor market, industrial policy, innovation, and skill-enrichment, instead concentrating on awarding public contracts to friends, pacifying voters with government jobs and pensions, and occasionally riding the sentiment of voters on social or ethical issues that have no bearing on public spending;

Free lunches in the form of extravagant pension benefits, the defense of special interests of all stripes, the support of the public debt, and the transferring of the responsibility to future generations have all been used to pacify voters. Currently, the situation is still grave because of the following:

  • Special interest groups, including journalists, unions, tax consultants, pensioners, and huge corporations. They will oppose any reform that could put their rent-seeking members in jeopardy. They will work together to prevent meaningful change.
  • These groups hold a proportionate amount of voting power. They favor a sizable minority, if not the entire majority.
  • The public debt and pension load placed on wage earners in the form of taxes, contributions, and the like is a disincentive to leave or cease working.

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