“Friends, now is the time to try.” Federico Marchetti, founder of the only Italian billion-dollar start-up, returned to his former university as a guest speaker for a semester. He explained the recipe for success of his business Yoox, a digital luxury department store, to 80 students at Bocconi University in Milan. In his introductory talk, the Italian e-commerce pioneer encourages people to start their business as a good time. Italy has changed, the climate is positive, capital is available, the recovery is strong, the country’s reputation abroad is much better, and the demand for green and digital businesses is huge. “Today, you young people don’t have to leave the country,” says the entrepreneur. Italy, it seems, has a future.
Indeed, the problem country of Europe seems to have changed. Eight months after taking office, Mario Draghi got the economy back on track, initiated reforms, tamed populist parties and restored confidence in the exhausted country. Marchetti is right: a better time is hard to imagine. The internationally renowned Draghi as head of government, the commitment of 200 billion euros in European development aid and ultra-low interest rates give Italy a unique opportunity to transform itself from top to bottom . But does the country use them too?
So far, it must be said, it is going wonderfully. Draghi’s mission is to put Italy on the path to sustainable growth after 25 years of stagnation. From personal experience, not a whole generation has experienced a flourishing economy in Italy. Boom? Never experienced. In the meantime, the Prime Minister announces each month that the government has once again raised its growth forecasts for the current year. Despite the high energy prices and delivery bottlenecks businesses around the world face. By the end of last week, when the cabinet passed the Roman budget, Draghi had achieved “well over six percent” growth. On the same day, the federal government lowered its growth forecast for 2021 to 2.6%. Bad world.
Is the economy just catching up on what was not possible for a long time?
The enthusiasm for the unusual dynamism puts Italy in a good mood. Draghi warns against excessive optimism. After the koruna crisis in 2020, when Italy’s economic output fell by 8.9%, so far it has only been an economic recovery. “We must be able to maintain this growth in the years to come,” said the former head of the European Central Bank. The race to catch up with the economy must turn into structural growth. It is now important that all the money is spent correctly. “For the first time in many decades, Italy is in a position to completely realign its economy,” said Laurence Boone, chief economist of the OECD. Now or never.
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Prime Minister Mario Draghi: “We must be able to maintain this growth in the years to come.”
(Photo: Andreas Solaro / AFP)
This is why there are things Mario Draghi does not even get involved in the discussions. The vaccination strategy, for example. When the mandatory Covid certificate went into effect at work in Italy two weeks ago, an angry minority of vaccination opponents threatened to cripple all of Italy by blocking ports and highways by Christmas. In Draghi’s coalition of national unity, right-wing populist Lega has also resisted the harsh and unique measure. For a few days there was a lot of buzz in the media. Draghi ignored the riot at all. And that’s how it happened: nothing. In Italy, even with the strict 3-G rule, there is still a long way to go.
The Green Pass has been valid for all employees without exception since October 15. The special Italian way is Draghi’s “Whatever it takes” in the fight against the epidemic. In July 2012, the then head of the ECB saved the euro with his famous three words. Now the Roman government wants to prevent the return of restrictions and closures at all costs to protect the recovery. The vaccine show of strength is meant to save Italians from the pandemic. Draghi came very close to his goal. More than 86 percent of those over twelve are vaccinated. The 90 percent mark set by scientists is in sight. The unwavering commitment has already paid off. In Italy, new daily infections currently account for a fifth of German cases. “Vaccinations have been a game-changer for Italy,” said the International Monetary Fund.
Draghi cancels his early retirement
The 2022 draft budget is also fully dedicated to permanent growth, with the expansive budget measures amounting to 30 billion euros. It provides for tax cuts of twelve billion euros, massive investments and a reorganization of social spending, which aims to increase the employment rate, especially among women and young people, and reduce the growing inequalities caused by the pandemic. As always, Draghi paid little attention to the wishes of the parties. Draghi has been working to neutralize the excesses of the ruling populist parties of 2018 and 2019 for months. His government is reversing or correcting the measures with which the coalition of the five stars and the Lega once raised all of Europe against Italy.
In the finance law, the government has now received early retirement introduced three years ago with the voices of populist ministers. The Lega electoral giveaway lowered the retirement age from 67 to 62 and cost the highly indebted state 30 billion euros in ten years. Draghi grants a transition year in 2022, during which one can retire from working life at 64 years old. “After that, Italy will return to the normality of the pension contribution”, he announced. We do not yet know how this return will take place. “This is how we rule out the problem for the moment,” criticized Milanese economics professor Carlo Cottarelli.
Citizens’ money, which the five stars had sold as a miracle weapon in employment policy, was unanimously declared a flop. “It is clear that the system did not work,” said Draghi. For its beneficiaries, the basic income was an incentive to undertake illegal work rather than regular employment. Now we are going to tackle abuses with demands, controls and cuts.
Draghi’s plan calls for unprecedented investments and far-reaching reforms to free Italy from its obstacles to growth. “Money and reforms – now, for the first time, we have both at the same time,” says his economic adviser, economist Francesco Giavazzi. This is why international economic experts are seriously questioning whether Italy is now facing a golden decade. The majority believe it is too early to say if the plan will work. This is also due to the fact that there are only three months left until the election of the new president in Rome. It is still unclear which position Draghi will occupy in February.