Zes, business incentives: the budget deficit overshoot complicates Meloni’s takeover bid in the north

She is flying to Milan to attend the gala dinner marking the start of Fashion Week – the first time a head of government has done so since 2016 – but Giorgia Meloni might actually face a few minor issues in the north, now that Istat has confirmed that, with a deficit-to-GDP ratio of 3.07 per cent, Italy will remain subject to infringement proceedings again this year. And to think that the Prime Minister had for some time now set her sights on the hard-working northern regions as an electoral base to secure and try to tap into. This is partly due to the fact that the Lega, in the midst of its party congress campaign, seems to be increasingly struggling to represent northern interests, now that even ‘rebel’ figures such as Massimiliano Romeo and Attilio Fontana are distancing themselves from the internal party dispute. Last week, the Prime Minister visited the Beretta factory in Gardone Val Trompia, in the province of Brescia, to mark the 500th anniversary of the firearms manufacturer. The week before, she had attended the International Rice Festival in Vercelli, Piedmont. These moves are intended to rebalance her public agenda after a series of appearances that had been heavily concentrated in the south, especially since Fratelli d’Italia chose to mark its record time in government by holding a rally in Bari, rallying supporters from across the south.

But beyond the trips, it is the economic commitments made by Meloni that have, more than anything else, enabled her to meet the demands of the north. Starting with the announcement, made in early September, of the extension of the single SEZ to the northern regions. This was one of the proposals put forward months ago by the League governors. The proposal was immediately seized upon with enthusiasm by Confindustria. It was clear from the outset that this would not be a genuine extension of the Single Special Economic Zone, which has mobilised over 60 billion euros. That is to say, at least since the Minister for Enterprise and ‘Made in Italy’ stated that ‘bureaucratic simplification measures made possible by the Single Special Economic Zone in the South will also be introduced in the North, but without the same economic incentives’. These remarks immediately caused people such as Fontana, Fedriga & Co. to turn up their noses. Just to refinance the tax credit applicable in the regions already included in the Single SEZ, some 4 billion is needed over the next three years, as requested by the Under-Secretary for the South, Luigi Sbarra. The government’s intention, beyond the simplifications, was to combine the SEZ with the refinancing of business incentives, which was to have been included in the Budget Bill. Last May, at Confindustria’s Festival of the Economy in Trento, Minister Urso had also promised new resources. Transition 5.0 has an application window that ends in September 2028, but the volume of applications has led the majority to consider extending funding beyond the six billion euros already invested. Will this still apply following Istat’s ‘rejection’? Still on the subject of businesses, in recent months a tug-of-war had developed between MIMIT and the State Accounting Office, both over Transition 5.0 and over the decree that was supposed to streamline interventions in this area. In a climate of financial constraints, in short, there are already those pointing the finger at the ‘little hands’ of the State Accountant General, Daria Perrotta. Then there is the long-standing issue of the ‘tax on banks’ windfall profits’, which is set to resurface. Yesterday, at the ‘Festa del Tempo’, Matteo Salvini avoided discussing it, but nevertheless called for a ‘bold budgetary manoeuvre’, hinting at measures concerning pensions and explaining that ‘the budget deviation must not be an end in itself but a means to an end’. It is a pity (for him) that FdI – as stated by Marco Osnato, chairman of the Finance Committee – has already responded that “the budget deviation is not the right thing to do at this time”. There is no doubt, however, that the budget deviation and windfall profits could also become a new source of concern for Meloni, who is forced to mediate not only between the divergent views of her deputies but also with the opposition of the Italian Banking Association (ABI) and Confindustria, who are alarmed by the prospect that taxes taken out the front door might come back in through the window.