European Recovery Fund. Now Italy Must Roll Up Its Sleeves to Make This Historic Deal Work
Italy has got a good deal, explains Carlo Altomonte, professor of European economic policy at Bocconi University: "Meanwhile, the overall structure of the Recovery Fund has never been questioned", explains the professor. "Today we can make debt to areas of the Union that are in difficulty and it is a revolution". In addition, this "finally common, finally European" fiscal policy is flanked by monetary policy to support the economic cycle. "And the markets are rightly celebrating", Altomonte comments. In terms of the political cost of the negotiations, "transfers to the states are maintained, but spending on European public goods is reduced. So, less money for investments, for research, for the energy transition". For this reason, "it is necessary that national recovery plans recoup at least partially this part of expenditure on green and digital", continues Altomonte. However, they must also speed up the timing of disbursements ("By the end of the year we can already have a green light, if we do everything right"), there will be an advance of 10% from January 2021 of the funds disbursed "and the possibility to include also the expenses already made in 2020. Finally, to those who point out that all the money that countries like Italy will receive will have to be repaid anyway, Carlo Altomonte replies that "in reality, this is not the case. The countries are giving a guarantee to the EU budget to pay it back from 2028, but new European revenues are also being activated in the agreement". For Italy, the agreement on the Recovery Fund is, in short, "an even better agreement than expected, but it must be very clear that the operational capacity to carry out projects and reforms on schedule, which is our historic weakness, will become central to ensuring the effectiveness of these funds," concludes Altomonte.