Suche
Mein Konto
Italy: Construction subsidies drive national debt to record levels
Italy's national debt is rising unexpectedly due to excessive construction subsidies. Learn more about hard-to-control costs and their impact on the economy.
Italy: Construction subsidies drive national debt to record levels
Italy's national debt is rising above planned levels, largely due to the country's generous construction subsidies. Originally estimated new debt of 5.3 percent of gross domestic product (GDP) from last year rose to 7.2 percent, only to add billions in additional costs. The Italian economist Lorenzo Codogno even predicts an increase in the deficit figure for 2023 to up to 10 percent. The introduction of the “super bonus” in 2020, which fully compensated the country's citizens for investments in heating systems, solar panels and insulation work, resulted in an estimated cost of around 210 billion euros, about 10 percent of GDP.
Finance and Economics Minister Giancarlo Giorgetti described the super bonus as “criminal” and has maintained it in a reduced form in order not to endanger economic growth. Forecasts for current year GDP growth have been set at 1 percent (versus 1.2 percent in the fall), with various institutions such as the Italian Central Bank and the International Monetary Fund offering lower estimates. Although measures have been taken to reduce the super bonus, the costs associated with it remain difficult for the state to control.
Public communication about government finances remains opaque as the government provides limited insight. The latest Documento di Economia e Finanze did not contain any forecasts on new government borrowing and total debt for the current year, which is considered unusual and worrying by experts. The government is unlikely to provide official estimates of the financial impact of its policies until September, leaving unanswered questions about the deficit decline, especially given announced tax cuts for low earners.
Despite planned tax breaks for citizens in 2025 and the shift to investments from the European Recovery Plan, which is intended to replace construction support, Italy is expected to become the subject of a European procedure due to its persistent budget debt. National debt continues to rise and the government must take concrete steps to curb the deficit and stabilize the country's financial situation.