Last Sunday I had a connecting flight in Brussels and got a copy of Saturday’s 5th January “L’Echo”, the Belgian French speaking most popular financial newspaper.
One article caught my attention. In particular Geert Noels, economist and founder at the investment firm Econopolis, compares the current situation in France to the Italian one.
“Yellow Vests’ protests pushed France to put its reforms on the shelves. At the same time Germany thinks to solve the problems of a “too big to fail bank” creating another bank, a bigger one. The ECB bought some time investing 3’000 billions Euro in debts acquisition. But now we are in a cul de sac with only a way out called: structural reforms.” Mr. Noels write.
He adds “French economy is the big sick of Europe. The Country has the highest tax pressure in the Eurozone, competitiveness lowered, public finances are unstable. In order to satisfy the “Gilet Jaunes” the public deficit will increase up to 3.5% of the GDP in 2019, a number that doesn’t take into consideration the deterioration of the economic conjuncture.”
While German and French economies were comparable about 15 years ago the differences raised without anyone paying attention because the EU institution were focusing on more sick (?) member countries like Greece and Italy.
“While Italian economy faces structural problems, especially in the South, it also has some hidden assets that France doesn’t have. E.g. Italy has a lower ratio of private indebtedness, a significant ratio of savings, a surplus of the current account and a more solid manufacturing industry. The problem of Italy is more the force of the Euro than, the often highlighted, public Debt.
If we don’t take into account Paris, France has an incredibly low per capita GDP. The Hexagon is organized in a centralized way while Italy is decentralized, thing that makes a huge difference in the disruptive times we are living these days. The average Italian citizen can adapt his habits if necessary bypassing the State while the average French citizen waits for Paris instructions.”
In a nutshell the Belgian economist says that our multilevel governance, structured around our Regions (e.g. Lombardy) has a positive impact for the Economy.
Within the possibilities of the “Titolo V”, i.e. articles 114 and on of our Constituion, a number of powers can be either assigned to the central government or to the Regions.
Regions Veneto and Lombardy (both with League’s governments) held referenda last year to avocate more powers and the president of Emilia Romagna (Democratic Party) asked the government for the same requests.
The Minister of Regional Affairs, Ms Stefani, is ready to submit the agreements drafted with regions Veneto and Lombardy (Emilia Romagna’s one is still in process) to the Prime Minister in order to start the procedure.
It is very likely that other regions, in the South Puglia showed already some interests, will follow this path.
More autonomy for the regions would generate an healthy competition among territories, creating more value and providing more financial stability.
Institutional architectures like the ones of Switzerland and USA are for sure more efficient than the centralized ones and the Italian government seems to understand that.
Autonomy is our structural reform.