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 for public sector investment, this also includes the funds allocated to local governments. 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

remains strong, though, thanks to the rebound in profitability and the reduction in leverage, coupled with smooth liquidity conditions overall. during the pandemic, italian firms built up their bank deposits significantly, reinforcing a trend that had been under way for some time. the historically high level of cash holdings ( 28 per cent of gdp ) and a lower ratio of net interest expense to operating profit ( 6. 4 per cent ) appear to be able to limit the impact of credit tightening. while subject to a high degree of uncertainty, our scenario analysis shows that firms'vulnerability is likely to remain limited overall, unless the economic cycle and debt servicing costs deteriorate far more than expected. even in an adverse scenario, with a significant reduction in gross operating income and a substantial increase in the cost of funding, we expect the share of debt of particularly vulnerable firms to remain well below the levels seen in serious crisis situations in the past. however, there are no significant signs of deterioration in credit quality so far at the aggregate level. likewise, the risks stemming from the state of household finances, which are also affected by the worsening economic outlook, remain limited overall. over the past decade, debt has remained broadly unchanged, at just above 40 per cent of gdp. the increase in mortgages as a share of total loans in past years was observed mostly on the fixed - rate side. in 2022, as fixed - rate borrowing became more expensive, variablerate mortgages gained pace until they accounted for the majority of new loans. 4 / 11 bis - central bankers'speeches meanwhile, though, the share of capped - rate schemes has been rising, in a trend that helps soften the blow of rate hikes. as with firms, large cash holdings help mitigate the risks to households : last september, deposits and currency in circulation exceeded €1, 600 billion, a historically high level, including in real terms, and accounting for over one third of total household financial assets. looking ahead, despite the erosion caused by rising inflation, accumulated wealth seems sufficient to enable households to service their debt, even in an adverse scenario where real income declines and interest rate hikes are much greater than expected. as long as fiscal policies continue to be cautious, the threat of a widening of the spreads and its negative effects on the real economy, as well as on the public accounts, should remain limited. therefore, the risks posed by rising key interest rates should prove manageable, even for private finance. with