In the aftermath of the downward revision of the outlook for the Italian rating by Moody’s, we have to wonder about the validity of this position, which anticipates the revision of opinion on our country by around two months. And to clear the analysis of any shadow of bias, we can start from what really does not work in the economy and then formulate a well-founded criticism.
First of all, Moody’s analysis is based on fears of a reversal in the macroeconomic cycle that is much more brutal than what can be expected today, a hypothesis that should not be ruled out. Rising energy prices are bound not to decline in the short term. Although Italy is not as dependent on Russian gas as Germany and has implemented some partial countermeasures (reactivation of coal-fired power plants, savings and decentralization of much of the fiscal surplus to control the cost of living), inflation could continue to weigh on the confidence of businesses and citizens by reducing investment and consumption. This would lead to lower GDP growth and greater difficulties in sustaining a debt of over 2.7 trillion. A scenario which also concerns countries less in difficulty than ours, such as France and Germany itself.
Moody’s second concern relates to the implementation of the NRRR and its reforms. If the macroeconomic climate were to deteriorate, it would be essential to boost investments financed by Europe. Remaining at equal distance from the two camps, there is no need to be afraid since the centre-right and the centre-left have confirmed their commitment to implementing the Plan. However, notes the rating agency, lower revenues from Brussels could generate spread risk without the effectiveness of the ECB shield being tested. However, these concerns would have been even more justified in the event of an election at the end of the legislature, perhaps at the end of a budgetary session complicated by the demands of both camps.
And this is where the suspicion about the “neutrality” of Moody’s arises: the tax cuts and the increases in minimum pensions are perceived with concern while the centre-right has taken care, first of all, to let the markets that each election promise will have its own financial coverage. “Political elections are a normal step in any democracy: Italy is capable, and will even be able with the future government, to remain faithful to the commitments of economic consolidation and structural reforms that it has already seriously undertaken”, declared the Under-Secretary of State for the Northern League. Economy, Federico Freni, said yesterday.
“The work of the Draghi government had become difficult” because of the differences within the coalition, commented Michele Napolitano, head of Western European sovereign ratings at the Fitch agency, stressing that “an early election of a paralyzed government , it’s better”. Fitch does not foresee earthquakes in economic and fiscal policies, because “Pnrr and Next Gen Eu will remain a priority for any government, of any color”, he added, noting that “Lega and Forza Italia have supported the Draghi government for months and it is hard to imagine that they will disavow his policies”.
In short, Moody’s could have been an entry right? Responding is not easy but a Draghi-bis (whatever the outcome of the consultations) would not mind either Wall Street or Brussels. “If we want to help our businesses and our markets, we must stop shouting fire, at the risk of negatively influencing those who make assessments of our country. Let’s talk about the facts and free our country from the prejudices that have not increased its reliability rating even in recent months and not even with a recognized personality like that of Mario Draghi”, cut short Carlo De Simone, professor of economics at Luiss.
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