On public accounts, and more concretely on the policies that can be implemented with state funds, inflation releases the classic effect of drugs. Positive in the initial phase, because it cuts the real value of the public debt and above all reduces its weight on a nominal GDP inflated by price dynamics, it soon gives way to subsequent, heavy and lasting consequences: cutting off the legs of public finance which, burdened from the repercussions on growing interest expenses, it must deal with the rigid diet of the actual value of the appropriations for the various expenditure items.
The tables of the 2024 Economic and Financial Document now being examined by the Chambers offer those who want to take advantage of the opportunity for a final assessment of the inflationary shock that caused prices to rise in 2022-2023 and has now ended, opening the long season of the down. A problem that is double in Italy, because the legacy of a Superbonus also weighs heavily, which after having given a boost (controversial in extent) to growth in recent years is now making itself felt with its waste made of additional public debt. It is an additional obstacle, not a small one: because the Government would need additional fiscal space to adjust the financial resources of crucial sectors such as healthcare and other public services to inflation. But the margins are exhausted a priori, to the point that, while awaiting the definition of the structural fiscal plan envisaged by the new economic governance of the EU, we have given up on outlining any programmatic hypothesis.
The Def numbers effectively explain why. To understand this, just look at the income statement of the public administrations (page 13 of section II of the Document, the one on “analysis and trends of public finance”) and compare the revenue and expenditure items of 2024 with those of 2021, prior to the surge of prices, eliminating inflation from everything.
The spending review theorists, convinced of the potential that could be exploited by reducing public spending, will discover that in real terms primary current spending, net of interest, has grown by 93.7 billion in nominal terms (+11.5%) but it decreased by 3.7% in real terms. To keep up with three years ago, in practice, 33.3 billion more would be needed. The image becomes more concrete when we go into the details of the individual macro chapters: real healthcare spending in 2024 is 6.2% below that of 2021, which it would only reach with an extra aid of 8.6 billion, and that for the incomes of public employees it loses a round 4% in three years, i.e. 7.9 billion nominal.
The decline occurs despite the extraordinary efforts made with the latest budget, which dedicated a third of its commitment (8 billion out of 24) to funds for the contract renewal of the public sector with an expense that is felt precisely by this year: but the full recovery of inflation relating to 2022/24, the three-year reference period for the new contracts, would have needed around 32 billion, divided almost in half between the central government financed with the maneuver and the sectors (local authorities, universities and so on) who cover the increases with their own budget funds. Because the problem of inflation such as that experienced in the last two years lies precisely in its dimensions which are substantially unmanageable for any public budget; especially when it is crushed by deficit and debt at Italian levels. Also in real decline, again to stay in the areas dear to the spending reviews, are the operating expenses of the public administration, summarized in “intermediate consumption” cut by 3.4% in three years in real terms
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2024-04-16 05:05:08