Stability Pact, the government is silent but the agreement will cost us 90 billion in cuts to public spending

“The new Stability Pact is a compromise, whether a downward or upward compromise, I said and I repeat that we will make the evaluations in some time”.
Music and words by Giancarlo Giorgetti, with our Minister of Economy who, in a hearing at the Chamber Budget Committee, added regarding the historic agreement reached in Brussels how there is "little to celebrate".
Giorgia Meloni, who has been struggling with an annoying otolithic syndrome for days, has yet to make any declarations in this regard, but on the eve of the Ecofin the Prime Minister had made it clear to the Senate how Italy could have vetoed the Stability Pact.
After all, for Europe the "good time is over" as Prime Minister Meloni declared during the last electoral campaign when she already felt she had one foot in Palazzo Chigi, but then it happens that the evening before the Ecofin, France and Germany find an agreement on the reform of the Stability Pact with Italy which immediately had to tag along, causing our government to lose the boldness of its best days.
Giorgia Meloni and Matteo Salvini thus had no choice but to make a loud statement about the reform of the ESM – after all there will be European elections in June – by not voting for its ratification.
A spite more than a decision taken in the country's interest: the old ESM approved by the last Berlusconi government is still standing and available to anyone who wants to request it.
However, the bill for Italy resulting from the new Stability Pact will be much heavier, with the Brussels hawks having managed to make the corrective procedures for countries not in compliance with their accounts practically semi-automatic, unlike in the past when instead, the various member states were often able to take advantage of different shortcuts.
read also Stability Pact: this is why austerity is back Stability Pact: a drain on Italy With the new Stability Pact which will come into force starting from the new year, Italy has a higher ratio between GDP and public debt at 140% when the minimum set by the EU is 60%, it will certainly be one of those countries that will have to implement plans to adjust its accounts.
Soon our government will have to decide whether to choose a 4 or 7 year plan, with the second option being much more likely.
Until 2027 – when this legislature ends – Giorgia Meloni will however be able to benefit from some discounts on the deficit, while starting from 2028 this elasticity will also disappear.
What does this mean for Italy? According to the authoritative Belgian think tank Bruegel, if our country were to choose a 7-year plan, as seems obvious, it will be required to reach a structural primary balance of 3.3% of GDP to be achieved by the end of the seven-year period.
For Brugel, this will translate into an adjustment equal to 0.6% of annual GDP for Italy, or approximately 12.5 billion in cuts to public spending every year.
If we consider the 7 years of the repayment plan, we thus arrive at a total of 87.5 billion.
A monstrous figure of cuts in public spending which, however, could be much higher, given that the 12.5 billion per year were calculated based on estimates for Italy relating to 2024: if our numbers were to worsen, the total bill it could exceed 90 billion.
At the moment the government has not said a word on the prospect of these draconian cuts to public spending that await us in the coming years, with minister Giancarlo Giorgetti limiting himself to assuring that a corrective measure will not be needed in 2024.