Italian Budget Law 2024

Stability Pact 2024, how it can change and why

The new 2024 Stability Pact should determine the amount of public money that the various European governments will be able to use.
At the moment, existing constraints are suspended to deal with the consequences of the pandemic and other subsequent international crises.
From 2024, however, the fiscal rules of the European Union will return to being applied, which impose limits on public spending and debt and consequently the resources allocated to citizens, with the various bonuses to which we seem to have become accustomed.
The objective of the new 2024 Stability Pact is not only to find a solution, but also to sign an agreement by December to make it operational as early as next spring.
If no agreement is found, the existing parameters will be used and put on hold.
The 2024 Stability Pact could therefore change, but not if an agreement is not found.
In this case, in fact, the debt cannot go beyond 60% of GDP and the deficit cannot exceed 3%.
However, these fixed points could undergo changes, for example having more time to reduce the debt, as Italy proposes.
read also Italy, there is only one challenge in 2024 and it is worth over 400 billion.
What changes with the new stability pact? The new 2024 Stability Pact could change its pillars or see them modified.
Among the latest proposals from some countries, including Italy, is the increase in the time available to reduce debt.
It is the countries that are close to the debt ceiling that have proposed increasing the time to 11 years, with a softer reduction path.
As Skytg24 reminds us, our GDP debt is estimated by the government this year at 140.2% and will decline only slightly until 2026, when it stands at 139.6%.
As regards the deficit, among the hypotheses on which we are working there is a guarantee clause which would limit the possibility of spending, lowering it below 3% in the event of economic shocks.
According to the data, our deficit in relation to gross domestic product stands at 5.3% this year, 4.3% next year and will fall to 2.9% in 2026.
In the background of the negotiation there is also the need to find a solution to consolidate accounts after the health emergency.
Among the proposals is that of not counting some of the expenses as debt, such as those for Defense and other European funds.
read also The five economic challenges of the Meloni government in Europe Tightening the belt: the Italian nightmare Even in the event of a softening of the Stability Pact, the Italian government finds itself acting by tightening its belt.
In fact, as indicated above, the deficit expected from 2024 onwards is not compatible with any of the more accommodating parameters, as La Repubblica points out.
Furthermore, the figures are optimistic and are based on growth forecasts which, however, experts point out, are "unlikely".
The assessment of the Italian economy, although defined as "stable", is in reality "immobile".
Istat reiterated that the economy could slow further at the end of the year.
The Meloni government therefore has a season of sacrifices ahead of it, starting with the resources to finance the cut in the tax wedge and other proposals of the Budget.
At risk is not only the country's economy, but also the majority's stability in achieving the objectives and promises to citizens, as well as the implementation of the Pnrr.

Author: Hermes A.I.

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