Visco: "Cautious optimism on speed out of crisis, do not waste Pnrr opportunity"

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October 21, 2021 "A full realization" of the National Recovery and Resilience Plan "is an opportunity that Italy cannot miss, especially for young people, to whom in the last quarter of a century the country has offered modest job opportunities. quality, forcing many, often the most qualified, to build their future abroad ".

This was stated by the governor of the Bank of Italy, Ignazio Visco, speaking at the 97th World Savings Day, on the theme "Private savings and European resources for the restart of the country", organized by Acri, Association of foundations and savings banks.

"The Plan - added the head of Palazzo Koch -," will support the recovery in the short term, but its success will be measured by the ability to tackle the structural problems that are holding back growth and to mobilize private resources that have been struggling for too long. to find employment in our production system ".

According to Visco, interventions on tangible and intangible infrastructures, together with the ambitious reform program that the country has committed to implement, can expand private investment opportunities, increasing the efficiency and profitability of capital. The effective execution of the Plan will foster the confidence of businesses in the possibility of embarking on a path of growth and sustained demand and thus favor a return on investments at structurally higher levels ".

" The developments recorded by the economy "lead to cautious optimism on the speed of exit from the crisis "and" prefigure a rapid recovery of pre-pandemic activity levels, albeit with not negligible sectoral and distribution differences ".

"Difficulties in the procurement of raw materials and intermediate goods have also emerged in the euro area, partly due to the speed of the recovery, with sharp increases in energy prices, especially gas. supply bottlenecks, which are beginning to be felt also in Italy, are to be assessed as temporary, even if they could weigh on production and prices longer than initially expected ".

"During this year, with the success of the vaccination campaign and the continuing support of economic policies, production activity has resumed at a faster rate than expected". "In 2021, GDP growth should be around 6 per cent; the ratio between public debt and GDP would already decline this year, with a marked improvement compared to the forecasts made only a few months ago".

"For our country, a return to the levels of activity recorded on the eve of the outbreak of the pandemic is not a sufficient objective". "The conditions must therefore be created", underlined Visco, so that saving, not only nationally, can find adequate outlets in private investments; likewise public resources, including European ones, must be used to lay solid foundations for the return on a stable path of sustained growth ".

"Since the outbreak of the pandemic, the deposits of households and businesses with banks have increased by more than 200 billion". "Part of this liquidity", added the head of Palazzo Koch, "will physiologically decrease with the return to growth in consumption and investments; we have seen the first signs of this in recent months, with a slowdown in deposits and a drop in propensity to save, however still higher than pre-pandemic levels ".

Compared to the European average, the governor again noted, "Italian families invest their financial wealth to a lesser extent in pension funds (3 per cent against 10), allocating instead a greater share in mutual funds and in" shares and equity investments " (15 percent versus 10 and 21 percent versus 18, respectively).

However, only a small part of the funds' investments finances resident companies: national shares and bonds, in fact, represent 5 per cent of their total assets, compared to 34 in France and 14 in Germany. Among direct investments in "shares and equity", those involving listed securities account for 2.4 per cent of financial wealth, half of what is observed in the euro area average. On the other hand, investments in shareholdings are significant, typically concentrated in small and unlisted companies ".

" Here, the ratio between capitalization and output is less than 25 percent, compared to almost 100 in France, 50 in Germany, 40 in Spain ".

In Italy "the conditions must be created so that saving, not only national, can find adequate outlets in private investments; likewise public resources, including European ones, must be used to lay solid foundations for a return to a stable path of sustained growth" .

Relaunch of

The revival of growth is "the main way to reduce the burden of debt, which constitutes an element of intrinsic fragility of our economy, because it exposes us to the risk of financial shocks and creates an underlying uncertainty that is reflected in the burdens of financing and discourages private investment ".

According to Visco, "debt can be used to finance crucial investments for productive activity, and in Italy there is certainly no shortage of areas in which it is necessary to spend more, starting with infrastructure, innovation and education. recourse in adverse economic conditions to finance social safety nets, and in emergency situations, such as those caused by the pandemic, to allow the implementation of extraordinary interventions. But as a rule the debt cannot be used to cover current expenses ".

"The incidence of pension expenditure will continue to rise over the next twenty years due to demographic dynamics; for the same reason, health care and assistance may also require an extension of the services offered. If the country decides to maintain or expand the perimeter of the 'public intervention ", he recommended," it will be necessary to ensure that the interventions are adequately covered, avoiding financing permanent increases in deficit spending, as has been the case in the past ".

Despite the exceptional efforts made, "the pandemic has nevertheless further shown the limits of the current European structures, which do not provide for a common budgetary capacity". "This capacity, sufficiently large and with the possibility of resorting to debt to finance investment projects or the activation of social safety nets and common welfare programs, would make it possible to combine a European budget policy with the action of monetary policy in contrasting far-reaching economic shocks.

The European debt ", he observed," would also represent a supranational financial instrument with high creditworthiness, which would facilitate the diversification of the portfolios of intermediaries and the integration of European capital markets, thus increasing the effectiveness of monetary policy ".

"If the economic trend continues to prove better than expected, it will be important to take advantage of it to reduce the deficit."

"With a responsible management of public finances, Italy can accelerate the decrease in the debt-to-product ratio, thus containing a significant source of risk". In this way "it will be possible to demonstrate that a temporary and broad support to the economy fostered by common policies, if well aimed at removing obstacles to growth, is not in contrast but can indeed strengthen the stability of the euro area, with benefits for all member countries and in particular for our society and our economy ".

sent his greetings for World Savings Day.

"The Day of Savings is characterized, this year, by a recovery in the rhythms of production and in household consumption, which is associated with a recovery in loans. The best climate of confidence will help to rapidly mobilize a precious resource, such as that of household savings, protected by the Constitution, contributing to the restart ".