The Recovery Fund, or Next Generation Fund, the phenomenal 176 billion of which two thirds as "Grant", transfers not to be returned, is a paradise for pro-Europeans. Europe finally does something, or rather it will do something, in 2021, perhaps, if the Austeri countries allow it. A little late, when the autumn economic shock has already wiped out a good part of the Italian economy, but you cannot want everything immediately, and not even a little late.
Without this premise, the "Next Generation Fund" will probably reveal the contradiction of every European construct, dominated by the "Competition mentality", and this will also ruin the little good that these aids could bring: in fact, the granting of contributions and loans it is linked to the acceptance of the Commission Recommendations contained in the "European Semester". This is practically the update of the seven-year plan, of Soviet memory, which is conducted every six months by the Commission, in which this gives the "Good" and "Bad" report cards to the individual states, all in the European perspective, and therefore antidemocratic.
What the latest "European Semester" recommendations sent to Italy said. You can find them in full at this link, but I propose a couple of significant excerpts:
For 2020, in consideration of the country's public debt-to-GDP ratio above
60% of GDP and the expected gap between actual product and equal potential product
at -0.1%, in line with the structural adjustment of 0.6% of GDP imposed by the
adjustment matrix agreed under the Stability and Growth Pact, the
net primary public expenditure is expected to decline by 0.1% in nominal terms.
In order to limit the increase in pension expenditure , the already envisaged pension reforms aimed at reducing the implicit liabilities resulting from an aging population should be fully implemented .
Savings could also be achieved by intervening on large pensions
which do not correspond to the contributions paid, in compliance with the principles of equity and
In the end how can we respect the European semester which imposes reductions in public spending and the creation of a greater surplus of primary expenditure (that is, of public expenditure less interest) and, at the same time, spending the money of the Next Generation Fund? Will the damage caused by the reduction in current expenditure (wages, pensions, etc.) not exceed the advantages for the investments which, in any case, must be co-financed and which are not said to go to sectors with other productivity?
The Next Generation Fund, or Recovery Fund, appears more and more like a sort of poisoned fruit to be eaten with great attention and after very careful calculations. Unfortunately, European ideological prejudices make it impossible to create tools that are truly useful for economic growth.
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/le-incredibili-contraddizioni-del-next-generation-fund-per-spenderlo-bisogna-non-spendere/ on Tue, 02 Jun 2020 13:44:45 +0000.