Parliament has approved the Economic and Financial Document, with an estimated GDP growth of +1% for 2024, slightly lower than the 1.2% forecast in the Nadef. The international geopolitical context, including conflicts in Ukraine and Gaza, tension in the Red Sea, inflation, and high interest rates, has influenced a “prudential” approach to public finances. Domestically, the unloading of building bonuses designed for economic recovery after the Covid pandemic has impacted the situation. This is the last Def outlining the programmatic framework of public finance for the next three years before new European rules come into force.
The text approved by Parliament only evaluates the current framework, not the programmatic one, which has been criticized by the opposition for postponing important decisions on fiscal policy and economic planning. The focus has been on the impact of the building bonuses on public finances, with concerns about constraining public spending in the coming years. The debt/GDP ratio remains a concern, with public debt expected to continue rising in the coming years.
The latest budget law extended tax wedge cuts for incomes up to 35 thousand euros until 2024, costing almost 11 billion euros. The government aims to confirm this measure in the next budget, despite warnings from the Bank of Italy about potential uncertainties in future public finances. The stability pact and tax burden projections for the next few years have also been points of discussion and contention among political parties.
Efforts to address these economic challenges have led to debates and differing opinions on the best path forward. Some express concerns about the impact of debt and tax policies on future economic growth, while others emphasize the need for stability and planning in the face of uncertain global conditions. The debates and decisions made in the coming months will shape Italy’s economic future and its position within the European Union.