Results of the online survey at the 29th “Outlook for the Economy and Finance” workshop, (April 6-7, 2018, Villa d’Este, Cernobbio)
Panel Agenda for Italy Moderator Ferruccio de Bortoli Carlo Cottarelli Nouriel Roubini Luigi Zingales
What will the agenda for Italy be and what must it be?
This was discussed at the closing panel of the second day of the “Outlook for the Economy and Finance” workshop organized by The European House–Ambrosetti at Villa d’Este in Cernobbio. Moderated by journalist Ferruccio de Bortoli, the discussion also included the presentation of the study “The End of Quantitative Easing in Europe and the Impact on Italy” by Carlo Cottarelli as spokesman for the project’s Advisory Board.
Through various scenarios, this study produced by Ambrosetti Club analyzes the prospects of Italian public spending in light of the end of the support offered by the European Central Bank through Quantitative Easing. Given the current situation, a potential economic shock in Italy could cause serious consequences in terms of the deficit/GDP ratio and the subsequent wave of speculation that would hit Italy. The proposal contained in the document suggests to let the primary surplus rise by 2021 to a threshold of between 3 and 4 percent, sufficient to allow Italy to be able to manage any recessionary emergency, including in the absence of support from the European Union. Under these conditions, Italy would be able to sustain its public debt by itself.
The goal of attaining an increase in the primary surplus at the rate indicated in the study is considered to be realistic on the basis of Italy’s current spending. A possibility guaranteed by the reforms undertaken by recent governments, reforms that have even won the appreciation of Italian businessmen, as reflected in the online survey: 53.3 percent of those attending see the actions of the out-going Gentiloni government as being positive, a significantly higher result than that of the 2017 survey. In total, 70% expressed a positive assessment of the government, while there was an equally clear-cut reduction in negative opinions.
Italian businessmen are also optimistic about how long it will take to form the new government, for which consultations have already begun with the Italian President. Forty percent believe it will be possible to nominate a new Council of Ministers within 90 days, 25.7 percent think it will take up to five months, while only 15.2 percent believe new elections will be required to obtain a majority. Opinions regarding the possible alliances among the various political parties are also quite divided: 29.3 percent see in the Center-Right and the PD the most desirable combination, while an alliance between 5 Stelle and Lega has the support of 15.2 percent. For those taking part in the online survey, equally as probable are alliances between 5 Stelle and PD (14.1 percent), and between Center-Right and 5 Stelle (16.2 percent). Finally, 17.2 percent hope there will be a re-election with a new election law.
Italian businessmen, questioned during the “Outlook for the Economy and Finance” workshop organized by The European House–Ambrosetti, agree with the forecasts that put Italian GDP growth between 1 and 2 percent for 2018: 78.2 percent is convinced that this will be the Italian growth rate this year, and there is a 5.5 percent group of optimists who think there will even be more than a 2 percent growth in Italy’s gross domestic product.
This is a value paradoxically in contradiction with the confidence index regarding Italy’s future prospects that emerged from the online survey. Up from 2017 is the number of businessmen who have low confidence, 38.4 percent, while 31.3 percent say they have medium confidence in Italy’s future.
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