The Italian government’s economic-policy response to the Coronavirus crisis

ABSTRACT

The Italian government’s economic policy response to the Covid-19 pandemic crisis has included large public programmes supporting households’ incomes and firms’ balance sheets, alongside a limited expansion of public health expenditures. The macroeconomic response has been in line with those of other European countries; Europe’s new approach to fiscal policy has opened up new possibilities for addressing the crisis. However, beyond the pandemic emergency, the government’s policy approach has lacked a longer-term perspective on economic reconstruction, environmental sustainability, welfare expansion and distributional outcomes. The fragility of Italian politics has contributed to this lack of vision and to a growing uncertainty over the country’s economic future.

KEYWORDS:

• Economic policy
• Covid-19 pandemic crisis
• public expenditure
• Italy

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. An analysis of the governments’ economic policies can be found in Pianta (2012, 2020) and in Marcon and Pianta (2013). On the industrial crisis see Cresti, Lucchese, and Pianta (2020). For a critical evaluation see the annual reports of Sbilanciamoci! Come usare la spesa pubblica per i diritti, la pace, l’ambiente from 1999 to 2020, available at https://sbilanciamoci.info/pubblicazioni.

2. Based on an initial estimate of GDP, of 2 February 2020, contained in press releases available at www.istat.it.

3. Unless otherwise stated, the figures cited in this article derive from our own elaboration of data taken from Istat, dati.istat.it.

4. An important provision was the permanent suspension of the ‘safeguard clauses’ for 2021 and 2022, involving €20 billion and €27 billion respectively. The clauses provided for an automatic increase in VAT on certain goods in the event of revenue shortfalls. The clauses had first been introduced by the Berlusconi and Monti governments during the sovereign debt crisis as a means of postponing deficit reductions to subsequent years while reassuring the financial markets concerning their commitment to policies of austerity.

5. See INPS: https://www.inps.it/docallegatiNP/Mig/AllegatiNews/Dati_e_grafici_SR41_3_novembre_2020.pdf

6. The data from the parliamentary Budget office are based on allocations, those of the Mef (Figure 3) on the net effects on the budget deficit resulting from increased expenditure, virement and lower revenues.

7. Legge di bilancio 2021, Rome, Ministero dell’economia e delle finanze, 31 December, available at www.mef.gov.it.

8. See Artoni (2020).

9. Campagna Sbilanciamoci! (2020).