Second Recession Will Last All Year, Warns Passera

Economic development minister tells Chamber of Deputies’ budget committee “a credit crunch has been created”

MILAN – “We are in the midst of a second recession and if we are to believe the forecasts, the trend will last all year”. Economic development minister Corrado Passera was giving the Chamber of Deputies’ budget committee his take on Italy’s economy. “We have been in a non-growth situation for a long time”, he explained, “and our task is to reverse a trend that not only fails to create jobs but could generate further problems”.

CREDIT – The minister also examined the credit issue. “A number of serious factors have come together. A lack of liquidity, rising overdue debts and banking regulations have deprived banks of more capital creating an out-and-out credit crunch. We need to act at once”.

BUSINESS – The government is committed to support for business. Mr Passera noted: “We know how compelling the need for simplification is. The idea is to present every two or three months a bundle of measures that impact on the lives of families and above all businesses, small and medium-sized enterprises (SMEs) in particular. The SMEs’ €100-billion debt is an enormous burden which has to be tackled by public finance objectives at a faster pace than the European Union has forecast”.

CENTRAL GOVERNMENT – In addition, the government hopes over the next twelve months to pay off at least half of the amount owed to businesses by central government. As Mr Passera pointed out, this comes to about €50-60 billion. He went on: “If in the upcoming twelve months we are able to put back into circulation half of the overdue debt, it would mean much in terms of impact on public finance and accounts”.

INVESTMENT – The government’s goal for public works is “to see over the next twelve months work worth a total of €40-50 billion in place and as far as possible actually in progress”. Infrastructures and existing projects will receive a fillip: “If we could clear up at least 50% of overdue debt in the next year, it would kick-start recovery and help businesses with their own debt issues”.

English translation by Giles Watson

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