那提西银行-意大利-宏观经济-意大利：不可能分配不存在的生产力-20180528-7页_671kb

Flash Economics: Concerns About Italy's Economic Policy

Core Content

This document discusses concerns regarding the economic policy proposals of the M5S-League government coalition in Italy, particularly their focus on boosting household income through measures such as lowering the retirement age, introducing a high universal income, and reducing taxes on households and SMEs. The analysis highlights the potential risks and the need for a more productivity-focused approach.

Main Points

1. Proposed Economic Policies

• Lowering the retirement age to 60 years.
• Creating a high universal income or at least a high minimum wage.
• Cutting taxes on households and SMEs, with a flat tax of 15% even being discussed.

These measures are intended to increase household income, but they are based on a fiscal stimulus that could significantly impact Italy's public finances.

2. Concerns About the Policy

• Public finances are robust: Italy's fiscal deficit has been lower than the deficit that stabilises the public debt ratio since 2016. It is financed by domestic savings and external surplus.
• Productivity stagnation: Labour productivity in Italy has stagnated for the past 20 years, meaning there is no additional income to distribute.
• Wage growth outpacing productivity: This has led to weak corporate profitability, depressed investment, and deteriorated cost competitiveness.
• No income reserves: Due to the lack of productivity gains, there are no reserves to support increased public spending or higher wages.
• Wrong policy focus: Boosting household demand is not the right approach when the key issue is underinvestment and lack of capital modernisation.

3. Policy Recommendations

• Restore investment to improve corporate profitability.
• Modernise capital to increase productivity.
• Improve labour force skills, as shown in the OECD PIAAC survey (Table 1), where Italy ranks low in overall scores.

Key Information

• Chart 1 shows that Italian real household income has only increased by 11% since 1996.
• Chart 2A illustrates that Italy's fiscal deficit is below the stabilising level.
• Chart 2B highlights that Italy has a significant external surplus.
• Chart 3 shows stagnant productivity over the past two decades.
• Chart 4A indicates weak corporate profits.
• Chart 4B reflects depressed investment.
• Chart 4C shows rising unit labour costs, indicating loss of cost competitiveness.
• Chart 5 demonstrates stagnant public spending due to the lack of a growing tax base.

Conclusion

The proposed economic policies in Italy, which focus on increasing household demand, are concerning due to:

• The risk of destabilising public finances.
• The lack of income reserves due to stagnant productivity.
• The need for a shift in focus to investment, capital modernisation, and skill improvement.

These policies are not aligned with the structural challenges facing the Italian economy.

Disclaimer

This document is intended for professionals and qualified investors only and is strictly confidential. It does not constitute a personalized investment recommendation or a financial analysis. The information is based on public data and not verified by Natixis. The statements and assumptions may be changed or withdrawn at any time. No liability is accepted for differences in valuations or regulatory compliance in various jurisdictions. The views expressed are those of the authors, and may differ from those of Natixis or its affiliates.