The European Stability Pact limits Italian public investment
The reactivation in 2024 of the European Union's Stability and Growth Pact marks a new chapter for the bloc's finances. This framework imposes strict rules on the deficit and public debt that directly affect countries like Italy, which has one of the highest debt burdens in the eurozone. The rules require keeping the deficit below 3% of GDP and sustainably reducing debt, which deeply conditions national economic policy. 🇮🇹
A mechanism that defines the national budget
The excessive deficit procedure is the key tool that the European Commission can activate if a member state breaches the limits. This process can lead to financial sanctions. To avoid it, the Italian government must design budget plans that demonstrate a credible reduction in its debt, which in practice forces cutting spending or raising taxes instead of allocating those funds to strategic projects.
Projects affected by fiscal restriction:- Expansion and modernization of the high-speed rail network.
- Renovation and improvement of key port infrastructure for trade.
- Public programs to improve energy efficiency in state buildings and housing.
Italy finds itself in the situation of having to ask for authorization in Brussels to repair its bridges or renovate its schools, a process that often resembles an accounting exam more than planning for the future.
The conflict between stabilizing accounts and growing
There is an intense debate in Europe about how to balance financial stability with the need for economies like Italy's to invest to modernize. Many economists and politicians in Italy argue that the current rules are procyclical, as they force spending adjustments just when the economy might require a boost.
Reform proposals and resistances:- Exclude public green and digital investment from the deficit calculation to avoid penalizing it.
- This idea faces opposition from Northern European countries, which prioritize fiscal discipline.
- The underlying fear is relaxing the rules and assuming shared financial risks within the union.
A future conditioned by the rules
The Stability Pact framework places Italy at a complex crossroads. On one hand, it must demonstrate to its European partners a firm commitment to the sustainability of its public finances. On the other, it urgently needs resources to fund its ecological transition, digitize its economy, and renew aging infrastructure. The dilemma between complying with Brussels and responding to internal growth needs defines the current political and economic landscape, with direct consequences for the country's ability to compete and prosper in the coming decades. ⚖️