Press Review #SoseXpress 4-10 September 2021

We must continue to support fiscal policies and open the debate on the future of governance in order to have this sustainable growth; this is the right time. 

Paolo Gentiloni - Commissioner for Economic and Monetary Affairs of the European Commission at the Eurogroup. 

The debate of ideas 

The EU project "Taxedu," an educational journey among students struggling with tax law 

"Taxes are the money collected by the state, which is redistributed to people who live in the same city or country or used to build roads, schools, parks and other useful things for everyone. The amount collected depends on what people own." The educational journey conceived by European countries' tax authorities is based on this principle, explaining the effects of taxation on everyday life through a series of initiatives. The Revenue Agency is also committed to educating tax law in Europe. The objectives of the TAXEDU web portal (crasis between "taxes" and "education") are to contribute to training on tax issues for young European citizens; reduce tax evasion and tax fraud in Europe through better information and training in this field; provide information to European citizens about the services implemented through tax revenues (education, health, etc.). Here and here to learn more. 

The 2020 state budget and the weight of the pandemic 

"State financial support for businesses, households and local governments during the health emergency was inevitable. However, the resources (debt) used have been excessive and they didn't always go to those who needed them". The pandemic has impacted the state budget strongly, and in 2021, due to additional support for businesses and families, 140 billion euros will increase the almost 160 billion debts in 2020. In July, the public debt has already exceeded 2,700 billion and will continue its run towards 3,000. Istat researcher Franco Mostacci analyses this issue. Here to read the full article published on LaVoce. 

Studies, research and number 

Istat: in July retail trade down by 0,4% in the month-on-month series, up by 6.7% on an annual basis 

In July, retail trade decreased slightly. Istat estimates a drop of 0-4% in value and 0.7% in volume mainly due to the decrease in non-food products (-0.6% in value and -1% in volume), while sales of food products remained stable in value and fell in volume (-0.3%). In the year-on-year series, the growth remains strong (+6.7% in value and +8.8 in volume) for both non-food (+8.5% in value and +12.3 in volume) and food products (+4.4 in value and +4.2 in volume). Regarding distribution channels, small scale distribution recorded a more significant increase (+8.2%). Here the note by Istat. 

OECD: 2021 Economic Survey on Italy  

“The key priority for Italy is to enhance the public administration’s effectiveness which will be substantial to relaunch investments and productivity and facilitate the access to quality public services for more vulnerable citizens.” These are some considerations made by the Organisation for Economic Co-operation and Development – OECD, in the 2021 economic survey on Italy. According to OECD, “Italian public sector could become stronger and more effective despite the lack of staff with the necessary skills.” According to The report, only accelerating the retirement of public servants over the coming decade will allow implementing an actual innovation process. Here to learn more. 

Bankitalia: In April, Italian households’ expectations about the economy improved. 

In April, the expectations of Italian households about the economy and employment improved along with the percentage of citizens who forecast the worsening of the general situation to the lowest level since last Spring. These results emerge in the latest Special Survey of Italian Households, carried out by Bankitalia after the Covid pandemic outbreak. However, in April, 30% of households declared a lower income than before the pandemic, while 70% expect in 2021 a revenue in line with 2020. Italian consumption remains conditioned by the health emergency also regarding consumption intentions. Here the survey by the Bank of Italy. 

Eurostat: GDP up by 2.2% and employment by 0.7% in the Euro Area 

In the second quarter of 2021, seasonally adjusted GDP rate increased by 2.2% in the euro area and by 2.1% in the EU compared with the previous quarter, according to an estimate published by Eurostat, the statistical office of the European Union. In the first quarter of 2021, GDP had declined by 0.3%.Compared with the same quarter of the previous year, seasonally adjusted GDP increased by 14.3%, improving the 13.6 % increase of the preliminary estimate. Eurostat also published the updated data on employment in the second quarter, recording an increase of 0.7% in the Eurozone and the EU. Here the press releases by Eurostat. 

OECD: in Italy, GDP up by 5.9% in 2021. Back to pre-Covid levels in 2022 

OECD estimates, Italy’s economic growth to be 5.9% this year and 4.1% in 2022, following an in 8.9% fall in GDP in 2020. A stronger-than-expected second quarter explains the upward revision of the 4.5% expansion forecast for 2021. The data emerge from the Economic Survey on Italy and underline the need to continue providing increasingly targeted fiscal support “until the recovery will not be consolidated in the economic and employment sectors." According to the organization, the public debt will rise to almost 160% of GDP in 2021. Here the note by OECD. 

Construction sector sees record rate of growth in August 

In August, the Italian construction sector recorded an unprecedented growth, increasing sharply to 65.2 points from 55.8 in July. Total activity rose at an unprecedented pace since July 1999, with a record pace in both housing and commercial sub-sectors never seen since data collection began in July 1999. These results emerge from the survey conducted by HIS Markit PMI on the Italian construction sector, monitoring month-on-month changes in the total construction output. The surveyed firms attributed the latest rise in sales to the government eco- and super-bonus schemes, as well as looser COVID-19 restrictions. However, according to the survey, concerns about supply chain disruption and rising costs remain. Here to learn more. 

Bankitalia: the increase of bank loans to the private sector and households in July. 

In July, lending to the private sector and households, adjusted to take account of securitizations and other loans transferred and derecognized from banks’ balance sheets, grew by 2.1 per cent on an annual basis against 3.4 in June. This was announced by the Bank of Italy in the publication “Banks and Money: national data.” Lending to households increased by 3.8% on an annual basis (as in the previous month), while that to non-financial corporations increased by 1,7% (against 3.8 in the previous month). The interest rates on loans granted during the reference month to non-financial corporations amounted to 1.05% (1.17% in June), those on new loans of up to 1 million euro were equal to 1.83%, while on new loans exceeding that amount were equal to 0.69%. Here for an insight on the Bankitalia’s website. 

Istat: exports up in the second quarter of 2021 

According to Istat estimates, in the second quarter of 2021, exports increased in seasonally adjusted terms in all Italian regions driven by the North, resulting in a marked widespread positive trend: +7.3% in the North-East, +3.8% in the South and Islands, +3.6% in the North-West and +0.2% in the Centre. More relevant increases were recorded in the macro-regions of the North (Lombardy, Emilia-Romagna, Veneto and Piedmont), which explain the two-thirds of export growth in the period. Istat explains that, in the same period, sales grew for basic metals and metal products in Lombardy, Lazio and Veneto and machinery and equipment in Emilia-Romagna, Piedmont and Veneto, which increased national exports by 5.7%. Here the note by Istat. 

Welfare Index PMI – Generali Italia: “Investing in corporate welfare improves companies’ profitability

Italian small and medium-sized enterprises have played a central role against the Covid-19 emergency, and their awareness of its social impact has improved through corporate welfare initiatives. This result emerges from the Welfare Index PMI 2021 Report analysing small and medium-sized enterprises’ welfare. The survey involved over 6000 enterprises in all sectors and of all sizes. Over 64% of SMEs exceeded the initial level. In six years, the enterprises with a high welfare level have more than doubled, from 9.7% in 2016 to 21% currently. Moreover, the survey highlights that 54.8% of the enterprises that introduced welfare in their corporate policies have increased productivity. Here to learn more. 

Istat: industrial production up by 7% in July on an annual basis

“In July, the seasonally adjusted industrial production index increased by 0.8% compared to June. The last three months also recorded an average increase of 0.6%. Compared to February 2020, just before the outbreak of the health emergency, in July the index was over 1.5%.” These results emerge from Istat data on industrial production last July. The Statistical Institute highlights that all economic sectors show increases in year-on-year terms, except extraction activities. The most significant increases concern electric equipment (+12.5%), metal and fabricated metal products (+11.9) and rubber and plastic products (+9.8%). Here the note by Istat.  

KPMG 2021 CEO Outlook: getting ready for the new reality 

After managing their activities in a year dominated by the pandemic, worldwide CEOs are planning a return to normality. Almost half (49%) of US CEOs indicated they have a high M&A appetite and will likely undertake acquisitions that have a significant impact on their overall organization, while 37% said they have a moderate M&A appetite and will make acquisitions that have a moderate impact on their overall organization. KPMG revealed these data in the Report “2021 CEO Outlook.” According to the study, 77% said they have an aggressive digital investment strategy intended to secure first-mover or fast-follower status. Here an insight. 

Istat: GDP up by 4.7% in the second quarter 

According to the August monthly report on the Italian economy by Istat, in the second quarter, the Italian GDP showed a considerable increase (+2.7%) exceeding the Euro area average and France and Germany. Istat highlights that the index, measured excluding construction, reached pre-crisis levels, recording a further increase in the last three months (+0.8%). The economic growth has improved the labour market. The worked hours and the number of employed persons increased significantly above all in the services sector (respectively +4.4% and +3.4%), exceeding the GDP increase (respectively +3.9% and +3.2%). Here the note by Istat. 

 

The voice of Stakeholders 

 

 Assoturismo-Confesercenti: Between June and August, tourists exceeded 33 million 

Between June and August, the Italian accommodation sector recorded 33 million arrivals and 140 million tourist overnight stays, increasing by 21% compared to 2020. Italian tourists drove the demand with 105 million overnight stays, 19.6% more than last year. Foreign tourists’ overnight stays amounted to 35 million, increasing by 25% compared to 2020, but still far from the 100 million in 2019. These are the figures that emerged from the survey conducted by Centro Studi Turistici for Assoturismo-Confesercenti on 2,085 Italian accommodation firms. According to the study, total tourists, including Italians, remain well below pre-Covid levels: -34% compared to the 2019 Summer. Here to learn more.

Innovation 

 

Digital competitiveness: Italy first in Europe and second in the G7 

The Digital Riser Report 2021 revealed that in 2018-2020, Italy from the last place ranks now second among the G7 countries and eighth in the G20 thanks to its performance in the digital transition. The study carried out by the European Centre for digital Competitiveness of the ESCP Business School evaluated the digital transformation capacity and progress of 137 countries worldwide over the past three years. The Report measures the two fundamental parameters of digital competitiveness: the ecosystem of a country, based on two indicators such as the ease of hiring foreign labour; and its culture, or the attitude towards entrepreneurial risk. Here the insight on “il Corriere delle Comunicazioni.” 

EU: from Open Source an economic growth of up to 95 billion 

The European Commission published a study analysing the economic impact of open-source software and hardware on the European economy. The Commission estimates that in 2018, the enterprises located in the EU invested about 1 billion euros in “open source” software, increasing the European economy by between 65 and 95 billion euros. The study estimates that increasing by 10% the contribution for “open source” software, GDP would increase by between 0.4% and 0.6% annually and facilitate the emergence of 600 new start-ups in the TIC sector in the EU. Here and here to learn more. 

Cybersecurity: in Italy, cyber-attacks on IoT devices explode, +93% in six months. 

In the first six months of 2021, over 1,5 billion cyber-attacks on IoT (Internet of things) devices such as smartwatches and smart appliances such as wash machines and fridges were detected. Intrusions exceeded 3.6 million compared to 1.9 in the second quarter of 2020. In particular, the number of IoT attacks coming from Italy increased in the last time by 93%. Kaspersky revealed these data highlighting that, according to the sector analysts, 127 new devices are connected to the Internet every second. Here to learn more. 

Local Authorities 

 

General Social services: the decree defining the service objectives for the general social services in 2021 was published 

The methodological Note defining the service objectives for developing municipalities' social services in Regions with Ordinary Statute was approved on 16 June by the Technical Committee for Standard Expenditure Needs and published in the Official Gazette No. 209 after being approved by the Presidency of the Council of Ministers. Municipalities' service objectives in 2021 will be defined according to each social function's actual financial standard needs and must comply with the standard expenditure needs methodology. Achieving the service objectives will improve social services, mainly in the municipalities tackling the biggest shortcomings. This step is preparatory to the definition of the Essential Level of service – Italian acronym LEP – in the general social services to guarantee equality throughout the country. Here to learn more. 

Centro Studi Enti Locali: new resources for local welfare and revised standard expenditure needs calculation mechanisms 

The Government allocated about 216 million euros in 2021 to support welfare. 46% will finance the local authorities in the South and, in particular, the municipalities disadvantaged by the old computing methods. This emerges from the analysis realized by Centro Studi Enti Locali for Adrkronos based on the data of the latest report on local welfare released by Istat (published in 2021 and based on 2018 data). The Government decided to intervene by allocating new resources on the one hand and modifying the allocation criteria, moving from the historical expenditure to the standard expenditure needs on the other. Here to learn more. 

Istat: one Municipality out of four provides completely digitalised services

In 2018, only one Municipality out of four provided one or more online services to households. The share increases to 77.1% for the municipalities with over 60 thousand inhabitants and falls to 16.5% for those with 5 thousand inhabitants, which face more difficulties on the path towards digitalisation. These results emerge in the annual update of the indicators measuring equitable and sustainable well-being in provinces and metropolitan districts, analysed in an article of "il Giornale dei Comuni." According to the report, the share of Municipalities providing completely online services for households highlights deep divides, depending on Municipalities' sizes and the considerable difference between North (30.4%) and South (15.6%). Here and here to learn more. 

The world of MEF 

 

MEF: tax revenue up by 11.5% in the first seven months of 2021 

Between January and July 2021, tax revenue exceeded 257 million euros, increasing by 11.5% compared to the same period of last year. According to MEf, between January and July 2021, direct taxes increased by 4.2% exceeding 143 mln euros. Irpef stood out, producing over 112 mln euros with an increase of 6.5%, thanks to the withholding taxes paid by private-sector employees, which grew by 11.3%, equal to a rise of five million euros in tax revenue. Indirect taxes stood at 113 mln euros, growing by 22.4% between January and July 2021, due to the increase of 27% in VAT revenue, driven by domestic trade, MEF explains. Here the press release by MEF. 

MEF: credit and liquidity for households and businesses 

Moratoriums are still active (pursuant to law and voluntary) for a total value of approximately 71 billion, against about 630,000 suspensions granted. Requests for guarantees on new bank loans for micro, small and medium-sized enterprises submitted to the Guarantee Fund for SMEs exceeded 191 billion. The loans guaranteed through the “Garanzia Italia” fund of Sace amount to € 28bn, out of 3,009 requests received. These are the main results of the survey carried out by the task force set up to promote the implementation of the measures to support liquidity adopted by the Government to face the Covid-19 emergency. The task force includes the Ministry of Economy and Finance, the Ministry of Economic Development, the Bank of Italy, the Italian Banking Association, Mediocredito Centrale and Sace. Here the Press Release by MEF.