Joint Session of the Fifth Committees of the
Chamber of Deputies (Budget, Treasury and Planning) and of the
Senate of the Republic (Economic Planning and Budget)
Preliminary hearing
on the budgetary provisions
for the three years 2019-2021
Testimony of the Deputy Governor of the Bank of Italy
Luigi Federico Signorini

Mr President, Honourable Members of Parliament,
I wish to thank you for giving the Bank of Italy this opportunity to provide its
technical assessment as part of the consultations on the budgetary provisions.
I will make only a brief reference to the general economic situation, which I
described in detail before these committees a month ago.
The information that has become available in recent weeks confirms the signs that the
economy is weakening. According to the provisional estimate released by Istat, GDP
stagnated in the third quarter. Our latest assessments are that industrial production was
basically stationary in September and may have diminished in October. The Purchasing
Managers' Index for that month has fallen below the threshold compatible with an
expansion of production, both in manufacturing and in services. More positive signals
are coming from the demand side: consumer confidence showed an improvement in
October, returning to the same level as at the end of last year; according to monthly
data on foreign trade, goods exports to EU countries increased in the summer. Financial
market volatility has sharpened and risk premia remain high.
Overall, given these developments, achieving the growth targets set by the
Government for next year is an ambitious goal.
The assessment we provided a month ago regarding the macroeconomic effects of
the budgetary provisions is largely confirmed in the light of the measures under
discussion.1 The expansionary impact projected by the Government appears
considerable.2 As I have already remarked, estimates of the macroeconomic impact
have a broad margin of uncertainty that also depends on the timing and the details,
as yet unknown, of some of the measures.
1. The budgetary provisions: an overview
The Government's budgetary provisions increase net borrowing, with respect to the
current-legislation projections, by an average of 1.3 percentage points of GDP per
annum in the three years 2019-2021, de-activating the safeguard clauses for next year
and reducing, though only slightly, the amount for the following two years.
2019. -
The Government plans to carry out expansionary intervention next year to
the value of €34 billion, just over a third of which will be financed by increasing
revenue and reducing expenditure. The deficit will increase by almost €22 billion (see
attached table).
Cancelling the increase in VAT rates and customs duties envisaged by the safeguard
clauses will lead to a €12.5 billion reduction in revenue.
In 2019, it is planned to introduce the 'citizen's income and pension' and to modify
the pension system, although the details and the method of implementation of
these measures are yet to be defined. The budgetary provisions simply institute two,
intercommunicating funds (in the order of €7 billion each) that fix the maximum net
cost of the prospective measures. The provisions also allocate additional resources for
public sector investment (€3.5 billion).
Other expansionary measures include expenditure increases worth €3.4 billion and reductions in revenue
of about €1 billion.
The measures will be financed to the tune of more than two thirds by raising revenue.
The main contribution will come from an increase in taxation of the financial sector
and the abolition of the optional tax system applying to some categories of business
(IRI - tax on unincorporated business income).
The 2019 deficit will come to 2.4 per cent of GDP, which is 1.2 percentage points
higher than the current-legislation projection and more than half a percentage
point above the Government's estimate for 2018. According to the Government's
assessments, structural net borrowing will increase by 0.8 points, to 1.7 per cent. As
we know, this budget target is under discussion with the European authorities.
Last spring the European Commission deemed that Italy was compliant with the debt-reduction rule even
though the debt to GDP ratio was not in line with the numerical parameter because it took into account
the 'relevant factors', including, in particular, compliance with the preventive arm of the Stability and
Growth Pact.
The budget targets set out in last September's Update to the 2018 Economic and Financial Document
diverge from the rules of the Pact's preventive arm. Instead of moving towards equilibrium, the structural
deficit - that is, net of the effects of the economic cycle and other temporary factors - would increase by 0.8
percentage points of GDP in 2019 and stabilise in the following two years.
In a letter dated 5 October, the European Commission requested a revision of the budget targets. The
Government confirmed the programme for the next three years by publishing the 2019 Draft Budgetary
Plan. On 18 October, the Commission noted a 'clear and significant deviation from the recommendations
adopted by the Council as part of the Stability and Growth Pact' and asked the Government to provide a
justification. Given the deviation, and considering that, as in the past, the reduction in the debt to GDP is
not in line with the numerical benchmark, the debt reduction rule will not be respected. On 22 October,
the Government confirmed its plans, citing the need to support the economy, and engaged to take all the
measures necessary to avoid overshooting the projected net borrowing level.
On 23 October, the Commission issued a negative opinion on the Draft Budgetary Plan. As well as noting
the failure to comply with the rules of the Pact for 2019, the Commission expressed the opinion that some of
the prospective measures (notably the tax amnesty and the change in pension requirements) could represent
a step backwards with respect to past reforms and that, should the downside risks for economic performance
projected by the Parliamentary Budget Office materialise, the deterioration in the public finances in 2019
would be greater than forecast by the Government. The Commission asked Italy to present a new Draft
Budgetary Plan by 13 November. On 29 October, the Commission also announced that it would re-assess
Italy's position with regard to the debt reduction rule and asked the country to submit all the elements it
regarded as significant for an overall assessment of compliance with European budget rules. On 5 November,
the Eurogroup stated that it was in agreement with the European Commission's assessment and hoped that,
through an open and constructive dialogue, Italy would cooperate with the Commission in drawing up a
new Draft Budgetary Plan that was compliant with the rules of the Stability and Growth Pact.
Were the Commission to re-issue a negative opinion on Italy's plan, it could recommend that the Council
open an excessive deficit procedure.
2020-2021. -
The expansionary measures will be greater in these two years (on
average by almost €37 billion per year) as a result of extending the regime forfettario
and introducing a substitute tax for sole proprietorships and self-employed workers,
granting a special tax rate for firms that re-invest their profits, as well as increasing the
funds allocated to public investment and public sector employment.
As to the financing of these measures, the absence of the temporary revenue from
the 2019 measures relating to the financial sector will be offset by abolishing the
ACE (tax allowance for corporate equity) and taking action to counter tax evasion.
In the Government's policy scenario, while the deficit will continue to be
significantly higher than the current-legislation projection, it will begin to
diminish again in 2020-2021. A contribution will come from the increase in VAT
and customs duties as a result of activating the remaining part of the safeguard
clauses: these will yield 0.7 percentage points of GDP in 2020 and 0.8 points
in 2021. The Government has in any case already announced that it will not in
fact apply this increase, but will instead replace it with other, as yet unspecified,
measures to reduce expenditure and improve tax collection.
In the period 2020-21, structural net borrowing is expected to remain unchanged
at the level estimated for 2019. The Government intends to resume the path of
adjustment in 2022, the first year after the end of the planning horizon; this could be
brought forward, but only if GDP and employment return to their pre-crisis levels
before the end of 2021.
2. The main expansionary measures
More than three quarters of the additional expenditure envisaged under the
budgetary provisions (on average €24.2 billion per year) will be used to create or
increase the Funds set up to finance the introduction of the 'citizen's income and
pension', to lower the minimum requirements for obtaining a pension, and to
revive public investment.3
In the first two instances, resources will be set aside for reforms that have not yet
been finalised. Moreover, if the expenditure of one of the funds proves to be lower
than expected, the residual amount may be transferred to the other.
It is also the Government's intention to set up special tax regimes for self-employed
workers and sole proprietorships, as well as to provide incentives for businesses.
The cost of these measures will mainly concern the two years 2020-21. Lastly,
funds will be set aside for public sector employment.
The Fund for the 'citizen's income and pension'. -
The Fund for the introduction
of the 'citizen's income and pension' will have a total endowment of €9 billion
per annum (about €7 billion net of the sums coming from the Fund to combat
poverty, which are presently set aside to finance the 'minimum income scheme').
The draft budget law only indicates the purpose of the measures: combating
poverty, inequality and social exclusion and guaranteeing the right to work.
Following the economic crisis, the absolute poverty ratio has risen considerably
among households, from 3.5 per cent in 2007 to 6.9 per cent in 2017. The increase
has been particularly marked (from 1.9 to 9.6 per cent) among households with
a younger 'reference person', i.e. under 35 years of age, which include a larger
proportion of foreigners (in 2016, in 60 per cent of younger poor households
the reference person was foreign). Instead, the poverty ratio is stable - and below
average - for households whose head is over 65 years of age (4.8 per cent in 2007
and 4.6 per cent in 2017).
Given the amount of resources allocated, the 'citizen's income' should be considerably
more generous than the current 'inclusion income scheme', not only as regards its
amount but also in terms of the number of beneficiaries. It is very important, therefore,
that it should be designed so as not to discourage the supply of regular employment by
providing for efficacious incentives and sufficient checks to prevent misuse.4
The budgetary provisions allocate part of the Fund's resources (€1 billion in 2019
and in 2020) to reinforce the employment centres, which at the moment play only
a marginal role in matching the demand and supply of labour.
If the measures to reinforce the employment centres are to be promptly effective, organisational and regulatory
changes will almost certainly be needed as well. Responsibility for the employment centres is split between
several levels of government, and the ways in which they cooperate with private sector agencies continue
to be ill-defined despite the institution of the National Agency for Active Labour Policies in 2015. We
calculate, based on Istat data, that in 2017, only slightly over 25 per cent of job-seekers contacted an
employment centre; the share of unemployed workers who found permanent work in the private sector
through an employment centre was 2 per cent. People who, because of individual and family characteristics,
are at greatest risk of poverty make even less recourse to the employment centres and are less likely to find
work through them. Even in countries with greater experience of active labour policies, the likelihood of an
unemployed worker finding a job through an employment centre is not high: in 2016, the proportion in
France and Germany was 7 per cent.
Lastly, in areas with low labour demand in particular, it is important for the employment
centres to be able to pass on job proposals originating in other regions.
Pension system revision fund. - The budget establishes a 'Fund for the revision of the
pension system through the introduction of additional forms of early retirement as
well as incentives for hiring younger workers'. The Fund will have an endowment of
€6.7 billion in 2019 and €7 billion starting in 2020.
Given that the information on the measures planned is incomplete, it is not possible
at this stage to comment on the possible effects.
As we have said several times in the past, it is certainly possible to make the current
rules more flexible, for example as regards minimum pension requirements. In
our opinion, however, intervention of this kind should recognise that the financial
sustainability and intergenerational equity of our system is based on the relationship
between contributions paid in and benefits paid out. In other words, the amount
of an early retirement pension should be adjusted in line with the lower amount of
contributions and the anticipated longer disbursement period. Failure to meet this
criterion would jeopardise the system's long-term equilibrium, increasing the burden
on future generations.
Public investment. - A substantial share of resources is allocated to public investment:
a total of around €16 billion over the three-year period (€3.5 billion in 2019, €5.6
billion in 2020 and €6.5 billion in 2021), of which almost €9 billion for central
government investment and the rest for local government investment.
General government expenditure on gross fixed investment has declined very
considerably in recent years, more than in the rest of the euro area. In nominal terms
it has decreased by almost 4 per cent a year on average compared with 2008; as a
percentage of GDP, it has fallen from 3 per cent in 2008 to 2 per cent. The largest
reduction has been at local government level.
The analyses at our disposal suggest that Italy lags significantly behind its European
partners in this respect.5 Italy's delay is not only due to scarce financial resources:
compared with other countries, costs and average implementation times are higher,
even when taking differences between areas into account.
Fixed investment by local government departments (excluding the effects of privatization receipts) fell by
almost 40 per cent between 2008 and 2017 (to €18.3 billion), reaching the lowest point in terms of ratio
to GDP of the last 40 years. The decline was common to all areas of the country, but was especially evident
in the regions of the South and Islands.
The failure of local investment to gain momentum in recent years may be due in part to the friction caused
by an overlapping of the implementation phases of several reforms, and particularly to the misalignment
between the new harmonised accounting standards (which came into force in 2015) and the balanced
budget principle (applied since 2016, replacing the Internal Stability Pact).
The Draft Budgetary Law simplifies the framework of the rules to which local authorities are subject by
bringing the method of computing the outturn for harmonised accounting closer into line with the method
used for the outturn considered for compliance with the balanced budget principle, thereby freeing up funds
to allocate for investment. All the local authorities will be affected by the changeover, except the special
statute regions, for which the new system will come into force in 2021.
On several occasions we have argued that it is desirable to shift public spending from
current to investment expenditure. Investment spending, in addition to boosting
demand (as its multipliers are usually higher than those of current expenditure), helps
to raise the productive potential of the economy as long as the projects are carefully
selected and efficiently implemented. It can also help to adopt transparent cost-benefit
analyses when selecting projects and procedures to ensure the efficient and relatively
rapid execution of the work.
It is important to underline that for the macroeconomic effects expected in 2019 to be
fully deployed the measures need to be implemented from the beginning of the year.
The budgetary provisions also envisage the creation of two new organisational units: the Central Office for
Public Works Planning and InvestItalia. The role of the Central Office will be to assist government departments,
both central and local, in the assessment of the economic and financial aspects of any intervention, during the
planning stage, and throughout the project management. InvestItalia will be charged with analysing and
evaluating plans for tangible and intangible investment, assessing the needs for infrastructure modernisation,
checking the state of progress of work, and preparing financial and legal feasibility studies. A potential
overlapping of competences between the two new units and between them and other existing bodies needs to
be clarified.
Special tax regimes for sole proprietorships and self-employed
workers. - The
budget provides for a reduction in the tax burden for sole proprietorships and
selfemployed workers. From 2019 the scope of the regime forfettario for small businesses
will be extended, with an increase in the turnover threshold to €65,000; from 2020
a new substitute tax regime will be introduced for taxpayers with a turnover of
between €65,000 and €100,000. These measures will entail a decrease in revenue of
€0.3 billion in 2019, €1.9 billion in 2020 and €2.5 billion when fully operational.
Currently, the regime forfettario applies to taxpayers that meet certain requirements regarding the amount
of their annual turnover (which must be below a threshold ranging from €25,000 to €50,000 depending
on their branch of activity), the amount of their expenditure on auxiliary workers, permanent employees
and collaborators, and the cost of capital goods. From 2019 the threshold for annual revenue would be
raised for all branches of activity to €65,000; the other requirements would lapse. The regime forfettario
would have a tax rate of 15 per cent, calculated on a fixed tax base that is the result of applying to turnover
different profit margin ratios according to the branch of activity. This tax would replace IRPEF and IRAP,
and businesses opting for the regime forfettario would not be subject to VAT. There would also be a 35 per
cent reduction in social security contributions for sole proprietorships.
The substitute tax system that would come into force in 2020 envisages a 20 per cent tax rate, which in
this case would be based on analytically computed income. There would be no reductions in social security
contributions.
It can be estimated that the number of taxpayers subject to the regime forfettario
will increase by around 60 per cent.6 About half of this increase will be the result
of the higher turnover threshold. For new beneficiaries, we estimate that their tax
rate will be reduced by an average of about 4 percentage points, to 11 per cent.
For those who will benefit from the substitute tax regime from 2020, the 20 per
cent preferential tax rate will reduce the average rate by about 7 points.
Although the objective of simplification is laudable, some efficiency and equality
issues raised by these measures will have to be carefully evaluated. The step effects
at the thresholds of €65,000 and €100,000 could discourage firms from expanding
and encourage elusive or evasive behaviour in order to keep income levels below the
thresholds. Furthermore, the tax burdens of people with similar incomes could vary
considerably.
Incentives for
businesses. - The Government partially confirms some business
incentives for high-tech investments and, under certain conditions, is introducing
a special tax rate for firms that re-invest their profits. The effects on the public
accounts will be modest in the first year of application; in 2020-21 they will be
considerable (almost €2.5 billion a year).
For tech-intensive investments the budget extends the hyper-amortisation measure,
the size of which depends on the amount of the investment concerned (over certain
thresholds, the special treatment would be cancelled). The incentive has so far supported
the adoption of advanced technologies, whose returns can be as high as they are uncertain.
While abolishing the ACE, which was designed to strengthen firms' capital, the budget
provides for the introduction of a special tax treatment in the case of re-invested
profits to increase employment and invest in tangible capital goods. This measure is a
permanent one. It will benefit firms when they make a profit, thus being more effective
in favourable phases of the economic cycle.
The aim of the measures - to support investment and employment - is certainly
commendable, but when introducing changes to incentive schemes, it should be
borne in mind that the stability and simplicity of the framework are among the most
important 'boundary' conditions for business activity.
Public sector
employment. - The budget allocates €2.9 billion, distributed over the
three-year period, for the renewal of the contract for public sector employees. This is
in addition to the amounts already allocated today (about €1.5 billion). According to
official estimates, the total amount of funds available would lead to an increase in average
wages over the three years, reaching just under 2 per cent when fully phased in.
Compensation of public sector employees as a share of GDP diminished by over 1 percentage point from 2011
to 2017, falling to 9.5 per cent at the end of last year. It decreased less in the euro area over the same period (0.8
percentage points), reaching 9.8 per cent. From 2011 to 2017, compensation of public sector employees in Italy
fell by more than 10 per cent in real terms, while it was basically stable on average in the euro-area countries.
The draft budget law also authorises the recruitment, in addition to what is
possible under current legislation, of more than 15,000 public sector employees,
allocating over €1.5 billion for this purpose over the three years.
There has been a sharp contraction in staff turnover in general government since 2012. This resulted in a
decrease of around 135,000 jobs per year between 2011 and 2017. For the three-year period 2016-18,
expenditure on newly recruited staff is limited to 25 per cent of the expenditure on staff terminated in the
previous year. According to the current-legislation projections set out in last April's Economic and Financial
Document, public sector employment is expected to stabilise next year.
In past years, the limits on staff turnover and the collective bargaining freeze helped
considerably to keep current expenditure down: between 2010 and 2017, primary
current expenditure increased on average by about 1 per cent per annum, while
expenditure on compensation of employees decreased by an average of 0.7 per cent.
After several years of restriction, a cautious easing can be justified. However, it will
be important to make use of the opportunity of contract renewals to introduce
or strengthen incentive mechanisms, and to ensure that the recruitment of new
public sector employees takes due account of the skills, including emerging ones,
that are needed to improve the efficiency of general government.
3. Funding
On average, over the next three years, the budgetary provisions would generate
resources of around €11 billion per year, enough to cover just under a third of the
expansionary measures; the remainder will increase the deficit to the extent I have
already mentioned.
The increase in revenue would amount to almost €9 billion per annum for the
next three years. In 2019 more than half would come from a temporary increase
in taxation on the financial sector; in the following two years the loss of this
temporary revenue would be offset by the cancellation of ACE and by the measures
to counter tax evasion and recoup revenue.
Other revenue measures of note include the abolition of the tax on unincorporated
business income (IRI), which was otherwise due to come into force on 1 January
2019.
The tax on unincorporated business income was expected to reduce taxation by nearly €2 billion in
the first year and about €1.3 billion from 2020. The optional system, which reduced taxation of sole
proprietorships and partnerships with a basic accounting system in order to achieve tax neutrality with
respect to their form of incorporation, was introduced in the 2017 Budget Law and should have taken
effect from 2018. Last year, its entry into force was postponed until 2019; under the draft budget law
it will be abolished.
The spending cuts would amount to €3.7 billion next year, €1.5 billion in 2020,
and €2.2 billion in 2021. Over the next three years, the cuts will represent, on
average, more than one fifth of the resources generated by the budgetary provisions.
These include, in 2019, the deferral to the following two-year period of capital
transfers to the Italian State Railways.
Like last year, part of the cost savings will come from cuts to ministries' spending
budgets (€1.6 billion on average per annum over the three-year period).
About a third of these cuts would come from rationalising expenditure on management of the immigration
centres; a reduction in military spending would be included (cumulatively €0.5 billion in the three years).
The other measures to reduce expenditure would include new, lower limits on tax credits for R&D (the
deductible amount would drop from 50 to 25 per cent and the ceiling would be brought down from €20 to
€10 million). The expected saving would amount to about €0.3 billion in each of the two years 2020-21.
Financial sector taxation. - The budgetary provisions raise taxation on the
banking and insurance sectors in the next three years: by €4.3 billion in 2019, €0.5
billion in 2020 and €0.8 billion in 2021. The measures envisaged postpone the
deductibility of a number of cost items and increase the amount of tax advances;
accordingly, they have a deferment effect.
The abolition of the ACE, recalled earlier, will make future recapitalisations more
burdensome for financial intermediaries as well.
As far as banks are concerned, the budgetary provisions would include changes to the deductibility, on the
one hand, of loan write-downs associated with the start of IFRS9 and, on the other, of cost items resulting
in tax deferred assets convertible into tax credits (these are loan write-downs made up to 2015 as well
as depreciation allowances for goodwill and other intangibles entered in the balance sheet up to 2014).
Overall, these measures would produce an increase of €4.8 billion in revenue in the next three years, which
would be offset by a reduction in receipts of the same amount in the following years.
For the insurance sector, the budgetary provisions envisage an increase in the tax paid on account on insurance
premiums. Currently, following the increases introduced in the 2018 Budget Law, the tax paid on account
amounts to 59 per cent for 2019 and 74 per cent for the years after. The provisions would increase this to 85
per cent in 2019, 90 per cent in 2020 and 100 per cent in 2021. The expected revenue in the next three years
is officially estimated at about €0.8 billion. Again, this would represent an advance on revenue.
The fight against tax evasion and measures to recoup revenue. - Revenue from
the fight against tax evasion and the recovery of tax receipts, which are relatively
modest in 2019 (€0.6 billion), represents over one quarter of the total funding in
2020 and almost one third in 2021 (€2.7 and €3.6 billion respectively).
More than half of the revenue (€0.3, €1.4 and €1.9 billion in 2019, 2020 and
2021 respectively) is expected to come from the introduction on 1 January 2020
(1 July 2019 for firms with a turnover above €400,000) of mandatory electronic
transmission of data on daily collections deriving from the sale of goods and
services. This measure should favour the emergence of the tax base in transactions
with final consumers, thanks to the greater timeliness of the information available
to the national revenue agency.
For the two years 2019-20, there would be a contribution of 50 per cent towards the cost of purchasing or
adapting the data recording and transmission equipment required by the regulation, up to a maximum of
€250 for purchases and €50 for adaption.
The remainder of the revenue is mostly of a temporary nature, stemming primarily
from the redefinition and expansion of the procedure for the settlement of tax
liabilities first introduced under the 2017 budgetary package. Taken together, the
provisions are expected to generate an increase in revenue of €1.5 billion per year
on average in 2020 and 2021.
The budget also makes provision for the automatic cancellation of debts of up to
€1,000 on individual tax bills assigned to revenue collectors from 1 January 2000
to 31 December 2010 and a new tax amnesty, to which no increase in revenue is
prudentially ascribed.
Under the amnesty, taxpayers would be able to use the DIS tax adjustment form to declare taxable amounts
not reported up to 31 December 2017. The adjustment, to be submitted by 31 May 2019, would be
permissible up to a limit of €100,000 yearly taxable amount and in any case could not exceed 30 per cent
of declared income. The additional taxable amounts reported would be taxed without adding any fines,
interest or other fees and at lower rates than those normally applying (with the exception of VAT). The sums
owed could be paid in ten half-yearly instalments.
The introduction of mandatory electronic transmission of collections data, along
with the other instruments to combat tax evasion adopted in recent years (such as
the split payment mechanism, new compensation procedures between tax credits
and debts, and the extension of e-invoicing to the private sector), aims to exploit
the increased availability of data to make controls more incisive and at the same
time to encourage greater voluntary compliance and cooperation between taxpayers
and the revenue agency. If properly implemented, it can help achieve a structural
improvement in the efficiency, fairness and transparency of tax collection.
Other measures, especially the tax amnesty, could discourage the regular fulfilment
of tax obligations; they should therefore be weighed very carefully.
***
The growth gap between Italy and the rest of the euro area is a structural problem.
Its most salient features were recalled a few days ago by the Governor of the Bank
of Italy:7 low productivity of firms; a population that is on average older than
that of other countries; a lower rate of labour force participation; young people
and adults with gaps in knowledge and skills compared with other Europeans;
general government that is somewhat inefficient; a less favourable business climate
than elsewhere; little public and private investment. The list is well known, has
been widely discussed and is, I believe, the subject of broad consensus. As the
Governor recently affirmed, 'the road to structural reform requires a significant
commitment, as results mature slowly. Yet reform is essential'.
The reforms implemented in recent years, or rather decades, have begun to bear
fruit. The recovery has generated more jobs than might have been expected: even
if GDP remains about 4 per cent below its 2007 level, the number of persons
in employment has reached a historical high. The labour force participation rate
of women and people in the higher age brackets has increased. The pension
system has returned to a sustainable path, following two decades of reform that
has risen to the challenge of an ageing population. More recently there have
been improvements in the administration of justice and on other fronts. Much,
however, remains to be done to tackle the outstanding issues. This is the best way
to increase future economic growth potential and thereby to create the resources
needed to combat poverty and alleviate the hardship of those who have been left
behind.
While useful in especially adverse cyclical phases, an expansionary fiscal policy
does not guarantee growth in the medium term, and in the long run can jeopardise
it. Between 2000 and 2006, before the global financial crisis, Italy achieved