Italian Economy: Marco Ginanneschi's opinion

ITALIAN ECONOMY MARCH 2021 - In a climate of global crisis due to the covid-19 pandemic, Italy is trying to get back on its feet through new reforms. A serious crisis of government has characterized Italian politics and influenced the economy of the italian territory, leaving room for reflection on what is the current situation. To deal with this issue we have an expert in the economic sector: Marco Ginanneschi.

Italian Economy March 2021 - Marco Ginanneschi speaks

Chartered Accountant, Statutory Auditor, and professor in the Degree Course in Business Management at Link Campus University.

Due to his considerable business experience, as an innovation manager in the economic world, we turn to him in this interview with the aim of analyzing the situation of the Italian economy, afflicted by the crisis due to the global pandemic, focusing on government changes and new reforms.

Currently, Italy is going through a period of persistent crisis to which they are trying to find a solution that still does not seem to arrive. From an economic point of view, do you think the basis for a proper economic restart is being laid?

To overcome the greatest economic crisis since the post-war period, it is necessary to lay the foundations for rebuilding a country on totally different criteria, on the one hand with a strong de-bureaucratization, which does not mean a loosening of rules or control activities, but rather a rapid and flexible evolution of procedures that can reduce decision-making time with targeted interventions to contingent needs, and on the other hand a strong impulse on the activities of renewal of strategic infrastructure that would allow an immediate revival of production that would benefit virtually all sectors.

It would be necessary to revise the Public Contracts Code and imagine decidedly different timescales for the various procedural stages of awarding a public contract and the relative timescales for completion. We have already had the example that the "Italian miracle" can happen, and I am not referring to the economic boom of the sixties, but rather to the Genoa Bridge that was designed, built and tested in less than two years after its collapse. For a good functioning of the administrative machinery it is not necessary to act in derogation of the rules with the appointment of the Extraordinary Commissioner on duty, as the ability to rewrite new rules that are in step with the speed of the economy to which we are accustomed today.

The weight of bureaucracy, according to a pre-covid study by Assolombarda, causes companies to lose at least four points of turnover, and reducing such a load would be even more beneficial than an equal percentage reduction in the current tax burden.

Lastly, it is enough to imagine, in spite of the emergency decrees, the wait of many months for the companies that have benefited from the reliefs or the long times to receive the redundancy fund for the workers that represent the category that deserves a greater social protection.

With the government crisis in January that led to the resignation of the now ex-Premier Conte and the installation of the new Draghi government, do you think there have been economic repercussions that have further aggravated the already precarious economic situation?

The Italian economy, which had already gone through a downturn from 2009 onwards, with annual GDP growth of a few fractions of a decimal point above zero, has suffered a shock due to the pandemic that has severely downsized entire production sectors, the effects of which will unfortunately only be visible in the coming months when the stop to layoffs ceases and the final accounts of jobs lost will be made.

I do not believe it is a political problem, but a problem of competence and the experience of recent years teaches us that honesty is an essential prerequisite to which must necessarily be combined a great capacity for strategic vision and knowledge of the effects that can cause each regulatory intervention.

In fact, we are accustomed to a bulimic production of regulations which often do not correspond to the desired effectiveness and this denotes ignorance (in the Latin sense of the term) of the complex dynamics of the Italian economy.

Obviously, the current government is composed, at least for the "strategic boxes" concerning the economy, by referenced professionals of international renown and the hope is that there are finally courageous and decisive interventions to address a situation not only emergency, but of real reconstruction.

There has been a lot of talk about the bonuses instituted in the past few months, which have often been criticized for not being sufficient to cover workers' lost earnings. Do you think this type of economic tool is an effective tool or do you think it needs to be implemented?

The bonuses of the past months were important to buffer an unforeseen situation, the timing and effects of which could not be known, at least in the initial phase.

With the passing of time it has become clear that structural interventions are needed, after a first aid to keep alive the hopes of a recovery, different solutions are expected. Sprinkled benefits are not sufficient and, above all, risk over time being dispersive and creating distorting effects in the free market.

The restart begins with the design of a new way of working, not only with smart working, but with a logic that makes it possible to make "new economies" on the space dedicated to work (at least in the category of services), on energy, on transport, which automatically generate new modes of consumption and free up further income capacity.

It is no coincidence that savings in 2020 increased in absolute terms, and this is an indicator that runs counter to the disastrous economic situation.

There could therefore be new premises for relaunching investment by the private sector, which at the moment is more timid due to the situation of uncertainty that has been created.

New investments will inevitably have to support digitization, Industry 4.0, industrial automation, robotics, blockchain, artificial intelligence and new communication networks.

What do you think about the Next Generation Eu?

Italy has a unique opportunity in history since the Marshall Plan.

2021 has a particular "star conjuncture" due to the start of the new 2021-2027 programming agenda and Next Generation Eu funds.

The next few months will be critical in strategically positioning available resources in spending chapters. Even the most convinced anti-Europeans are perhaps maturing the idea that, if there were no supranational support, it would be very difficult to get out of a crisis of global dimensions by their own efforts.

New investments will inevitably have to support digitization, Industry 4.0, industrial automation, robotics, blockchain, artificial intelligence and new communication networks.

We have at hand the opportunity for a second Renaissance, only if the ability to use the funds do not follow the examples of past years, where Italy is among the European countries with the lowest use; one thing above all: in the 2014-2020 programming, now nearing closure, about 48 billion available, were actually spent about half and this denotes how many opportunities over the years we have lost. Only on the Recovery Fund, the share due to Italy is 209 billion and to have the ability to spend it is necessary first of all to have an intervention plan for strategic investments and first rewrite the rules to reduce the level bureaucracy of procedures in which we are unfortunately inevitably trapped.

In relation to the Next Generation Eu, in your opinion, what could be the points on which Italy will focus with the first deadline of April 30, 2021?

The goals of the Next Generation EU are now beginning to take shape in increasingly precise outlines and the areas of intervention for Italy will be those of sustainable growth, with a new approach on digital, a new efficiency in productivity while respecting ecology, the development of smart cities, the encouragement of the circular economy with the adaptation of resource management systems, the reuse of raw materials, the industrial reconversion with technological criteria. The winning strategy will be to be able to combine new working models with attention to social issues and respect for the rules for new life scenarios that are on the horizon.

Do you think that Italy can manage to have a minimal recovery of the economy in the months to come?

In the short term, unfortunately, there doesn't seem to be any encouraging signs, at least until the arrival of the summer. The hope is that the effectiveness of the health care policies put in place will bear fruit by year's end, but in many cases the working model we had in the pre covid era will no longer be the same.

Some people think it's just a black-out and that at the end of the pandemic everything will go back to the way it was, but in reality, more than a year later, it will be necessary to draw conclusions and intercept new opportunities in a rapidly changing economic world that leaves no room for nostalgia for a past that will now become history and no longer up to date.For furthermore information click here.