Italy: Budget ‘compromise’ sign of mounting tension

The clash between the Salvini-Di Maio government and the European Commission on the budget law has been at the centre of the Italian political situation for more than two months. The draft submitted by the government to the technocrats of Brussels was initially rejected by them. Pierre Moscovici, the European Commissioner for Finance, asked the government to rewrite the budget proposal to avoid triggering action against Italy.


In response to this threat, the government has on the one hand increased its bellicose declarations emphasising its intention to stand up to the European strictures. But, on the other hand, it rewrote the budget along the lines of the European Commission demands, making a 180 degree shift compared to the declarations made a few weeks before. The EU itself had actually made concessions on its own ‘rules’ in relation to budget deficits, not pushing for the level of cuts it wanted for fear of provoking an explosion.

The Italian government has tried to demonstrate to the EU and to the Italian population that they are in perfect harmony with the neoliberal demands of Brussels and that they are willing to have their own economic policy dictated by the highly reviled Commission. The current edition of our paper, Resistenze, deals with this sudden turnaround in the editorial below, translated into English.

From the ‘people’s budget’ to one dictated by the European Union

In politics, as in other areas of life, it is good practice to judge people and organisations by what they are doing and not by what they say they are doing. In essence, we need to look at deeds and not at words.

The Budget Law 2019 represents an excellent opportunity to demonstrate concretely what are the priorities and specific plans of the government in economic matters. After months of ‘We will abolish poverty!’ propaganda, bombastic declarations and media campaigns, Italians can finally judge this government on the basis of a concrete and vital decision like the Budget Law.

The proposal recently voted on is the second version of a finance bill rejected in parliament and rejected by the technocrats of the European Commission. Despite the belligerent statements of ministers and party secretaries against Brussels and the European Union, it is now clear to everyone how the government has bowed to the economic diktats of the Union, accepting significant changes to the most important law of the year. Originally a budget with a deficit of 2.4% was planned. This new version, after the intervention of Brussels, brings it to 2.04% – the difference of a decimal point but something which means billions of cuts in the welfare state. Specifically, 7.5 billion cuts.

The two flagship measures of this government – the citizen’s income and the establishment of the ‘Quota 100’ pension reform – are not provided for in the text of the law because ad hoc decrees will be presented on the two measures. However, the Budget Law provides for the financing of these two measures. Specifically: 7.1 billion euros is to be allocated to the citizen’s income- a figure considerably lower than the 9 billion originally allocated, and 3.9 billion for the reform of pensions and the Quota 100, compared with the 6.7 billion originally planned.

The so-called ‘Quota 100’ will not actually be such and will affect the few tens of thousands of pensioners, mainly from companies in the north, who will be able to retire before the age of 67 with 38 years of certified contributions. For all the others, the much-vaunted Fornero reform will remain in force.

As far as the citizen’s income is concerned, this will be paid on condition that we undertake to follow a training course and to accept every job that will be proposed. It will be enough simply to be owners or co-owners of a house, or have 5,000 euros in the bank, to be excluded from those who qualify for this income, which cannot be disbursed for longer than 18 months.

Moreover, in order to be favourably looked on by the Brussels technocrats, the Italian government had to present a maxi-amendment with the so-called safeguard clauses. These clauses represent the guarantee that in the event of spending ‘overruns’ in 2020 they will proceed to an increase in ordinary VAT that will jump to 26.5%. In addition, the government has committed itself to freeze 2 billion euros of expenditure on public services that will be automatically cut if the economic situation worsens.

Cut, cuts, cuts

The budget is a budget of cuts – cuts in social spending, cuts in public services, cuts in infrastructure. With it, the government plans to cut public spending by 4 billion euros, the cuts will amount to 6 billion by 2021 and 1 billion euros will be taken from the budgets of the ministries. The State Railways, which already offer a poor service and are struggling against unfair competition from private groups such as Italo, see their budget reduced by 600 million euros. The Development and Social Cohesion Fund, which finances economic activities in the south, will be reduced by 800 million euros. This is without even considering the total block on any new jobs in public administration and the universities until December 1, 2019…

As if all this were not enough to qualify this budget as an anti-people manoeuvre, hostile to the interests of workers and poor people, we have the introduction of the so-called “Fiscal Peace”. Behind this ambiguous name hides an amnesty for the great evaders, carrying on exactly what the previous governments have done. With this law, the present yellow and green government has also reintroduced the ban on indexing pensions above €1,530 introduced by the ‘technical’ government of Mario Monti.

The Budget Law also provides for openly racist measures such as the establishment of a 1.5% tax on money transfers to non-EU countries. This is not a measure designed to stop the flight of capital but an attack on poor workers such as the Ukrainian and Filipino carers who send 100 euros home to support their families. In addition, the budget provides for a cut of €400million for three years to the fund for the integration of migrants.

But the bad news for the poor is accompanied by good news for the rich. The budget actually provides for tax exemption on sun-shades at (private) bathing establishments plus an extension on the concessions to private individuals who use these establishments for a further 15 years!.

What makes this anti-people budget even more unacceptable is the start of a real wave of privatisations, with the sale of state property worth 18 billion euros by 2019 alone.

What does 2019 hold?

It is clear from all this that the Salvini-Di Maio government has surrendered to the European Commission in a cowardly fashion. If it has chosen not to fight, it is because it fundamentally shares, more than just in a few aspects, the neo-liberal and anti-working class outlook of Brussels itself. The real tragedy is that today, due to the failures of the left and the timidity of the trade union leaders, the majority of poor workers and pensioners support this government of social slaughterers.

This situation will change, and quickly. The year 2019 could bring with it a new wave of struggles and social confrontations across the country. As with the ‘Gilets Jaunes’ movement in France, it is likely that these struggles will take on new forms, unable to express themselves immediately through traditional parties and trade unions. The anti-capitalist and revolutionary forces must prepare themselves today for a situation where confidence in the government collapses and great explosions of social anger erupt.

The mistrust and anger will lead to a breakdown of what is a phony social peace. Being able to intervene in this situation with an anti-capitalist programme is the challenge that awaits us in the coming months.



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