The entry into technical recession in Italy, which has been mired for months in the noise of the propaganda government formed by 5 Stars Movement (M5S) and La Liga, returns the country to reality. The news, in an unusual gesture, was advanced by the Prime Minister, Giuseppe Conte, the night before. The idea was to transmit at all costs that it was an expected data that does not alter the forecasts on which the Executive has based its controversial budget. The fall of 0.2% quarterly – the second consecutive – is the worst for five years. You have to go to the fourth quarter of 2013 to find an equal, but the Government says it does not plan to revise its forecasts
The fragility of Italy was evident into negotiation of the budget with the EU, in which the markets triggered the risk premium up to 2013 levels and they warned the government of the consequences of taking the deficit beyond what the EU set. That's why yesterday all the strong men of the Executive came out in a thud, starting with Conte himself, who attributed the fall to the trade war between China and the US. Then came the Economy Minister, Giovanni Tria, who said that the "expected" data "does not affect the confidence of investors." And, finally, it was eThe Deputy Prime Minister and Minister of Labor, Luigi Di Maio, who pointed out that the fault of the situation was of the previous governments, in spite of the fact that its Executive was formed last June.
The Government of Conte, after several corrections, set its growth target for 2019 at 1%. A data that could falter now if there is not a strong investment in the coming months. In fact, the Italian Central Bank and the International Monetary Fund (IMF) foresee an increase in GDP of 0.6% in 2019, while the financial rating agency Standard & Poor's aims for 0.7% and the consultancy Oxford Economics 0.3%.
The situation does worry entrepreneurs, who have been warning the government for months about the consequences that some decisions would have. The president of the employer's association (Confindustria), Vincenzo Boccia, believes that in January there will be a lower decline linked to the fall experienced by Germany. "We have to start doing the planned public works, starting with the TGV (the high-speed train that should unite Turin and Lyon)," he said, referring to the controversial rejection of the infrastructure imposed by the M5S.
If the negative forecasts are confirmed in the first two quarters of 2019, it is very likely that a budget modification of about 2,000 million euros will be used to avoid an increase in the deficit. In fact, there is already a clause in the agreement reached with the EU that would allow it. The problem is that the M5S and the League have presented some expansive accounts that foresee the reduction of the retirement age and a kind of citizen income that will shoot for those that will be needed, at least, 10,000 million euros.