Corrective Budget After European Elections: Meloni’s “Gift” to Italians by the End of June?

A Corrective Maneuver After the European Elections

Giancarlo Giorgetti continues to deny the need to adjust the accounts, but Giorgia Meloni will hardly be able to avoid giving this sort of surprise to the Italians once the delicate European vote is behind us.

After the approval of the Def, during an event in Trieste, Minister Giancarlo Giorgetti reiterated that “there will be no corrective maneuver”, with the government respecting the Nadef, where, however, other growth estimates for 2024 have been included.

The Risk of a Corrective Maneuver After the European Elections

According to what Dino Pesole writes in the Sole 24 Ore, the government is likely to “launch the corrective maneuver at the end of June, coinciding with the budget adjustment, to send a signal to the European Commission, which will open an excessive deficit infringement procedure in those days.”

“The uncertainty – reads the article – concerns the new GDP target, which the government sets around 1% (two decimal points lower than the Nadef estimate) but which could decrease to the 0.7% estimated by the IMF (1.1% in 2025) and by the European Commission (0.9% in the autumn).”

In essence, Meloni and Giorgetti would continue to base their calculations on a GDP that in 2024 should grow less than the government’s estimates, with the concrete risk of a budget hole that will have to be filled with a corrective maneuver.

However, the subject seems to be a taboo in Palazzo Chigi until the Italians express their vote for the European elections, but once the polls are closed, the government will have to deal with the real problems of the country.

The article in the Sole 24 Ore talks about “Superbonus, decreasing inflation, and uncertainty about growth” as the three elements that “make it quite complex to maintain a decreasing profile of debt and bring the need for a corrective maneuver closer.”

The risk would be so concrete that a sort of roadmap has already been drawn up: “a first step, once the elections for the new Parliament have been celebrated, around June 21 in defining the ‘technical trajectory’ provided by the new rules of the Stability Pact for countries with a debt/GDP ratio exceeding 60% and with a deficit exceeding 3%.”

As is well known, Italy far exceeds these two limits and – always after the European elections – will not be able to avoid the start of an infringement procedure for excessive deficit, with Giancarlo Giorgetti admitting that in this case Italy, together with another dozen Member States, will receive the dreaded letter from Brussels.

It now seems clear that everything is frozen awaiting the European elections, but the fear is that lower-than-expected GDP growth could create a hole of around tens of billions to be filled with a corrective maneuver.

As for how to find the money, the first hypotheses are already circulating: in addition to privatizations – not only Poste, but also Eni – there is talk of tightening deductions and tax credits unless it is possible to increase revenues from the fight against tax evasion, with geopolitical uncertainties such as the risk of a war between Iran and Israel that could complicate matters.