Italy's Structural Budget Plan: Aiming for Fiscal Prudence
The Italian Minister of Economy and Finance, Giancarlo Giorgetti, presented a medium-term Structural Budget Plan during the recent Council of Ministers meeting. This plan reflects updated data from national accounting revisions released by Istat and discussions with social partners. The government anticipates an average growth rate of net primary expenditure close to 1.5% over the next seven years. This trajectory includes specific growth rates for the years 2025 to 2031, with a notable 1.9% expected in 2027. The structural budget plan is characterized by a serious and responsible approach, aligning with the government's ongoing fiscal strategies.
France's Public Deficit Concerns: A Call for Corrective Measures
In France, newly appointed ministers Antoine Armand and Laurent Saint-Martin have raised alarms about the public deficit, which could exceed 6% of GDP in 2024 without immediate corrective measures. This forecast marks a significant increase from previous estimates and reflects a growing concern about public spending. During their first appearance before the Finance Committee, the ministers emphasized the need to reduce public spending to align with European budgetary requirements. They plan to submit the draft finance bill for 2025 by the week of October 9, with a focus on cutting expenditures and potentially increasing targeted taxes, while ensuring that the burden does not fall on the lower and middle classes.
Economic Strategies: Balancing Growth and Fiscal Responsibility
Both Italy and France face challenges in managing their fiscal policies amid rising public spending and economic pressures. Italy's strategy aims for a gradual reduction of the debt-to-GDP ratio, projected to fall to 134.8% by the end of 2023. In contrast, France's government is under pressure to devise a budgetary plan that addresses its public deficit while fostering economic growth. The emphasis on spending cuts and potential tax increases reflects a broader trend in European fiscal policy, as governments seek to maintain compliance with EU requirements while navigating the complexities of economic recovery.
- The Italian plan emphasizes the importance of a prudent fiscal approach, especially in light of the revised nominal GDP figures. The debt-to-GDP ratio's decline is crucial for Italy's long-term economic stability, with the government committed to adhering to the new rules that mandate a gradual reduction. In France, the new ministers face skepticism regarding their proposed austerity measures, particularly from opposition parties. The debate surrounding public spending cuts and potential tax increases is expected to intensify as the government prepares for the upcoming budget discussions. The ministers' commitment to protecting the purchasing power of the middle class and low-income individuals will be closely scrutinized as they navigate the fiscal landscape.
