The Ultimatum, set by Italy’s President mattarella the parties, was loose tipped. The economic consequences of a prolonged government crisis in Italy, however, are and remain.
This Tuesday, the parties in Rome should be auditioning for head of state Sergio mattarella, and reports, whether you see opportunities to form a new (or old) government. Now the main players have time until Wednesday. A new dispute has flared up to the incumbent Prime Minister: Giuseppe Conte to lead according to the will of the 5-star movement, the new government. The social Democrats are strictly against it.
The Alternatives are anyway on the Hand: Either a new coalition in the current Parliament, a majority, or there are new elections. This early ballot is to prevent mattarella, and not just because the last General election in Italy took place only in the past year – there are also tangible economic reasons.
All observers are, in fact, agree that in the case of early elections, a regular budget for the coming year can not be from the current Parliament. And that would have consequences, which could be for Italy fatal. The key word is long, and VAT is increasing.
In Italy, the Executive head of the government, Giuseppe Conte
Already for years it is law in Italy that the VAT is phased in must be increased from year to year, to the gigantic national debt of the country to oppose something, and to keep the chronic hole in the Budget in limits. The state deficit is currently at a good 133 percent of the annual economic output of the country.
VAT at 25 percent?
The increase is automatic – so it want years the budget laws of previous –, if not austerity measures to comparable results. But without a regular budget, no austerity measures. Without regular budget of the VAT in the next year would be so, and it’s only four more months missing, to 25 percent from 22 percent.
By the increase, so it is reckoned, more recently, the “Corriere della Sera”, the Italian average couple with two children 756 euros per year less available. The increase in the value-added tax, as Economists know, is especially true of the less well-off hard – and it acts quickly on the consumer. The Italian economy is now on the verge of a recession.
In the second quarter, the Italian statistical office reported zero growth. For the whole of the current year, the EU Commission expected in its latest forecast for Italy with a “marginal” growth of 0.1 percent. In the coming year is expected to rise to 0.7 per cent – the forecast came prior to the current crisis.
The rotation of the VAT screw had been introduced in 2012, the Berlusconi government, the following governments poured him later in the shape of a Law. At that time, Italy had to save in a dispute with the EU Commission’s EUR 20 billion.
Salvini’s Promises
This Time, it goes back to the requirements of the EU, the previous governments in Rome, as a rule, have observed. The strong man of the Italian Right, the Lega-Chairman Matteo Salvini, wants to blow the whistle on Brussels and has already announced a spending programme of € 50 billion, he should take over the government without the VAT increase. The sum, which will feed through to the higher VAT, this Time at 23 billion euros.
This is not only a challenge to Brussels, it could also be a disaster for the country. “The increase in the VAT is simply a tax increase”, was the trade Association Confcommercio. “The government crisis, in a time of zero growth and in the face of a potentially unsafe budget law, is an obstacle to investment and consumption,” the Association’s Chairman, Carlo Sangalli. Any hope of a recovery in Italy is linked to private consumption.
Almost 10 percent of the unemployed in Italy
Also from the European environment is expected for Italy support to The Italian crisis “is in a critical Phase for Europe, with the danger of a recession in Germany, the establishment of a new Commission in Brussels and could contribute to a significant deterioration of confidence in the Euro zone,” said the chief economist of the Italian employers ‘ Association Confindustria, Andrea Montanino.
Weak Growth, Sovereign Debt, Unemployment
The “Italian crisis” are not only weak Growth and sovereign debt. Unemployment currently stands at almost ten percent. In the South, the country is losing educated young people to migrate in the face of the 28 percent of youth unemployment. And especially in the case of women, the stay, the employment situation is disastrous: Only 35 percent of them are employed, while the European average is 67 per cent.
In the difficulties of the banking sector – especially in the case of Italian banks have large stocks of bearings to Italian government bonds, and all in all for around 400 billion euros. The two major banks, UniCredit and Intesa Sanpaolo lost in the past twelve months, 40 percent or 30 percent of their value.
The forecasts, Numbers, and political prospects for Italy the choice between plague and Cholera: completed as a result of early elections is no ordinary budget – until mid-October, a draft budget must be sent to Brussels, increasing the VAT and presses on to the consumer. It comes after new elections, a government under the leadership of Salvini’s threaten thanks to its 50-billion-plans for severe disruption in the relationship with the EU – from the international credit Italy non-donors to talk to.
ar/iw (agencies / archive)