Net of interest on debt, last year our country's public spending amounted to almost 890 billion euros: an amount over 4 times higher than what we will be called to spend in the next 5 years with the money made available by the 'European Union with the Recovery which, we recall, amount to 191,5 billion euros.
Let's be clear: no one questions the importance and usefulness of the European resources that we will be called upon to invest in the coming years. Do not mention it. However, we would like the debate that has opened in recent months in the country on the need to spend these resources well and soon be applied always; given that, in the last year alone, public expenditure has touched 890 billion euros.
An expenditure, the public one, which for about 90 per cent is current and is used, in particular, to settle the salaries of civil servants, to allow the consumption of the public car and to pay social benefits. To say it is the CGIA Studies Office.
Now, entrusting all our growth expectations to the “success” of the “National Recovery and Resilience Plan” (PNRR) is an extremely right and right thing; however, it is equally crucial that the Draghi government also intensifies attention on how these 890 billion euros are used each year and activates, to a more incisive extent than has been done up to now, a more careful and prudent monitoring system.
• PNRR: many investments, but little profitability
Our PNRR is made up of € 235,6 billion, of which 191,5 attributable to the Recovery Fund, 30,6 to a complementary fund and the other 13,5 billion to REACT-EU. Of these 235,6 billion, 52,6 will be invested for "existing projects", or already planned, while the remaining 183 will go to finance "new projects". Therefore, in 2026, GDP growth, the year in which the action of the Plan will end, should be 3,6 percentage points higher than the scenario that would occur without the effect of the additional investments.
A forecast, the latter, which is prefigured in the optimal scenario, namely that investments are spent efficiently, that monetary conditions are favorable and that there are no negative repercussions on the sovereign risk premium. Conditions that, of course, no one can confirm to us will occur.
If, compared to what has been reported, the general picture were less optimistic, our PNRR assumes 2 other scenarios: an average one with a 2,7 percent GDP growth and a low one with a 1,8 percent increase.
• A multiplier effect of contained GDP
Analyzing only the optimal scenario, in the face of 183 billion in investments, in 2026 we will have a structural increase in GDP of just under 70 billion, resulting in a multiplier of GDP equal to 1,2.
A not particularly exciting result, reports the CGIA Studies Office, if we take into account that, according to a study by the Bank of Italy, the construction of public works can have important repercussions on the economic growth of a country if the multiplier of public spending for investments it is between 1 and 21.
It is true that the 1,2 per cent envisaged by the Draghi government in the PNRR would fall within the range indicated by the Bank of Italy, but it is equally true that we will achieve this objective only if everything goes in the right direction; something that many observers doubt, given the chronic inefficiency that characterizes a large part of our Public Administration, the amount of bureaucracy that grips the country, the historical inability to spend all European funds and the timing of realization of Italian public works that present delays which have no equal in the rest of Europe.
It should also be remembered that Italy does not arouse a high degree of reliability in macroeconomic forecasts. The data of the European Fiscal Board (independent advisory body of the European Commission) that we report below are merciless: between 2013 and 2019 we are the country that has "made mistakes" the most. Another reason to doubt that we will be able to achieve GDP growth of 3,6 percent and, consequently, have a multiplier of 1,2.
• 750 new employees expected, but in one year we have already lost 900
Even on the employment front, the effects of the PNRR will not be particularly exciting. Thanks to the 235,6 billion of investments, in 2024-2026 employment in Italy is destined to increase by 3,2 percentage points which in absolute terms are equivalent to 750 thousand employees. Certainly an important figure, even if it must be taken into account that in the first year of the pandemic alone we lost 900 jobs, despite the fact that the redundancy block is in force by law. We do not dare to think what will happen next, when this measure is almost certainly eliminated.
• The errors of forecasts on the GDP: Italy lagging behind in the EU
In addition to having public spending often full of waste and squandering, Italy has a sad European record: we find it extremely difficult to develop reliable economic growth forecasts. In the latest annual report of the European Fiscal Board, published in October 2020 (fourth annual report), an analysis is provided on the differences between actual GDP growth and the projections presented in the stability and convergence programs during the period 2013- 2019.
Compared to the countries of the Euro Area, Italy presents the most critical result: growth forecasts turned out to be high in all 7 years examined (2013-2019). After Italy, there are 5 countries that have estimated the highest forecasts in 5 years out of 7. They are: Belgium, Spain, France, Latvia and Slovakia.
Italy's result is also critical in terms of the average forecast error; in this negative rank we are second only to Slovenia, with an average annual estimate error equal to 1,3 per cent of nominal GDP; this discrepancy translates into an impact on the budget of the public administrations of more than 0,5 per cent of GDP per year (in 7 years around 60 billion euros on the budget of our PA).