Def, green light from the Council of Ministers to the last document before the EU revolution

Today the Council of Ministers approved the last economic and financial document before the arrival of the new EU governance rules. The text, unlike in the past, will limit itself to presenting trend data without revealing the cards on the program data. It is undoubtedly something new compared to the past but if you analyze the context in which the government is working there is no need to tear your hair out or scream scandal, as many journalists have done in recent days. The choice to omit the programmatic data is the result of two facts. The first is that we still have to understand which Stability Pact will be decided in the EU, and this will have inevitable effects on the 2025 budget. It therefore makes no sense to approve a “classic” Def with figures and allocations, perhaps even interesting ones, and then have to move forward back when you discover the new rules.

Even without knowing the new Pact in detail, we can hypothesize that the government will almost inevitably have to make cuts in the next budget law. In fact, we start from the assumption that the austerity component in the EU, driven by the bloc of northern countries, is particularly strong. Reduction in resources which will need to be quantified but which will undoubtedly affect the measures that the government will allocate for 2025. We also remember that rules such as those for cutting the tax wedge and other incentives to lower taxes are of an annual nature and this implies that for 2025 new funds will need to be found. Also worth adding is the issue of cutting taxes for the middle class, a tax reform project, also linked to the finding of new resources. This means that you can't do everything with a short blanket. It is therefore not very smart to put down an ambitious Def and then have to retract everything, given the situation in which the EU finds itself.

Another fact, which should calm things down, is that in recent weeks the Ministry of Economy and Finance has started a dialogue with the Commission on how to structure the Def. The choice to omit the numbers is therefore the result of a comparison with the EU and not a government coup. It should also be remembered that the Def 2024 carries with it a considerable burden: the debt of the superbonus. The Minister of Economy himself, Giancarlo Giorgetti, defines it as “a very heavy legacy” (all the building bonuses from 2021 to today cost 210 billion euros, more than the Pnrr which accounts for 196 billion). However, according to Giorgetti, this burden will not lead to a course correction to deal with the impact of the measure on the debt. “We certainly want to exactly respect the Nadef objectives of last autumn for a credibility issue, if there is something to correct we will correct it but essentially we are in line”.