Following the outcome of the March 4, 2018 General Elections, all eyes are on Italy’s economic resilience when faced with a difficult political transition. Economically, stars are still aligned. Italy is up for two more years of growth above potential (+1.4% in 2018, and +1.2% in 2019), supported by past reforms, supportive financial conditions, and the Euroboom.
- (Economic) life is like riding a bicycle: you don't fall off unless you stop pedaling (reforms). Seeing through the fog, we identified five areas for action and 12 specific recommendations inspired by French President Macron’s centrist policies, which have been quite successful in restoring business confidence.
- Macron-omics #1: Boost Purchasing Power. Two ideas: (i) Implement a more progressive income tax; and (ii) Reduce price rigidities in several sectors.
- Macron-omics #2: Unleash Financing and Investment. Three proposals: (i) Improve collateral rules on corporate loans to restore the credit channel; (ii) Develop financial products to tap into Italian wealth; and (iii) Expand the reduced capital gain tax.
- Macron-omics #3: Count on SMEs - Mass Flourishing. Three suggestions: (i) Introduce a reduced corporate tax rate for SMEs; (ii) Lower employer social contributions; and (iii) In-centivize faster inter-enterprise payments and e-invoicing.
- Macron-omics #4: Think Brand Equity. A couple of resolu-tions: (i) Refocus on attractiveness; and (ii) Make export a national priority.
- Macron-omics #5: Build #ItalianTech. Two recommenda-tions: (i) Make Italy a digital innovation champion; and (ii) Move from labor market reforms to human capital building
