Italy will hold the presidency of the council of the EU during a particularly sensitive phase for European politics. The EU parliamentary elections proved controversial and there is still great uncertainty on the economic recovery which has led many citizens to call into question their confidence in the European project. This delicate situation is nonetheless full of opportunities, starting with the finalisation of the investment plans co-financed by EU structural and investment funds 2014-2020 – an exercise which will address priorities such as youth unemployment, sustainable growth, transport, energy and ICT infrastructure. The debate that surrounds the new commission and the new president of the European council offers a chance to discuss strategic issues such as the flexibility of the stability and growth pact (SGP) and the effectiveness of the employment initiatives undertaken to combat the crisis. Furthermore, a critical rethink of how the EU has managed, and overcome, the worse phases of the crisis should enable the union to be more prepared in the future to ensure that financial stability measures never again compromise social and territorial cohesion.
"In Italy we have seen a 37 per cent fall in public investment up until 2013 which has depressed and restricted growth"
We are all aware that EU, national, as well as local and regional, governments must make significant changes to help foster growth in the real economy. To do this, we need a different approach to calculating budget deficits, in the context of the stability pact. The current rules governing the SGP do not distinguish for accounting purposes or qualitatively between current spending and investment spending, thus drying up the potential for growth and development. Italian regions and cities have been forced to cut public spending in support of public investment, as well as reducing capital expenditure and increasing taxes at the very moment when the crisis required quite different measures. In Italy we have seen a 37 per cent fall in public investment up until 2013 which has depressed and restricted growth. If we don't reverse this trend as a matter of urgency, the European social model will be further threatened and services that are vital to the quality of life of Europeans could be jeopardised, such as public transport, the environment, school buildings and social housing, as well as in production sectors vital for our economies, such as construction.
During the Italian presidency, the Committee of the Regions and the new European parliament could potentially instigate a drive away from austerity policies towards a revival of public investment on the basis of a revision of the accounting rules of the SGP. This could serve to open up job opportunities and reduce precarious employment situations for women and young people; reduce the tax burden on labour and provide tax incentives for investments by companies; support the restructuring and conversion of the production sectors through a more extensive system of social shock absorbers; direct part of public demand as a driver for new business activities; and support a new era of investment in infrastructure and in making areas safe. Another operational measure already called for by the Committee of the Regions and parliament is to exclude national cofinancing of the European structural and investment funds from SGP calculations. This would be another practical and immediate measure designed to leverage investment and to bring about the much needed step towards change.