Analysis. Gentiloni: ‘Energy prices will remain high for a long time, and price pressures are spreading to different goods and services.’ Draghi needs to find €3 billion to fund welfare services.

Italy goes dark and the government is looking for money

The lights went out, but the voices were not silent.

The lights were those of the monuments of all Italian cities: they turned off in unison at 8 p.m. on Thursday night, and the blackout lasted for half an hour.

The voices were those of the parties, the unions, the associations that demanded a timely intervention against the soaring electricity bills. The darkness, after all, had its own voice: this was the formula adopted by ANCI to try to “sensitize” the government.

The strongest voices were those of the PD, which convened the party leadership on Thursday: “We’ll ask the government next week for a double intervention on bills, energy and bonuses,” Letta confirmed. It’s a full press court from the PD, but actually from all the parties in the majority. On the one hand, the aim is to immediately pass a large support decree; on the other, to set up a strategy that can cope with the situation, not using emergency stopgap measures.

The crisis won’t be a short-term one. No one has any illusions about the “transitory” nature of the increase in the cost of energy, not even in Brussels. Commissioner Gentiloni says it clearly: “Energy prices will remain high for a long time, and price pressures are spreading to different goods and services.” In short, the crisis is showing its teeth, inflation as well (for 2022, the EU Commission estimates it at 3.8%), and sooner or later the increase in rates imposed by inflation will make itself felt as well. Lagarde and the ECB are taking their time in the hope of postponing monetary tightening until the last months of the year so as not to strangle the recovery. But it is only a matter of time.

Developing a structural strategy also takes time. Certainly, it will be through greater use of self-sufficient gas resources and the acceleration of the use of renewables. But in both those cases, the effects will not come soon enough, and they imply significantly different strategic choices in terms of the energy transition. For subsidizing the coming March bills, time is short and the unknowns are still many. The amount, first of all: it will certainly exceed €5 billion, it could reach €7 billion. Then, in turn, the decision on the particular source of funds: depending on how much Draghi will decide to invest, an amount ranging from €1 billion to €3 billion is still missing.

Where to find them? The government has made it clear where they don’t want to find them: in an amendment to the budget. Draghi does not even want to discuss it. He believes it would affect the credibility of the country, which is committed to reducing and not increasing the debt.

But the parties are not convinced—not all, at least. Fassina, from LeU, insisted that without revamping the budget, no adequate intervention will be possible. Even the M5S, through the mouth of Minister Patuanelli, doesn’t rule out a budget amendment: “If it’s for the high cost of energy, it wouldn’t be bad debt.” €3.5 billion will come from ETS auctions. From the ever-present “unused funds,” there will be another billion. The rest will be found in the coming days.

The last question mark concerns the recipients of the support. The list of those in need is a long one: the most disadvantaged families are at the top of the government’s list, followed by businesses, local administrations, and health providers.

The nature of the aid to families must be decided. If they follow the model of the Legislative Decrees for the bills of the two previous months, it will concern families with certified income of under €8,265 per year, which becomes €20,000 if they are families with four or more dependent children, plus recipients of the citizenship income or citizenship pension.

Overall, there are 3 million families that qualify for electricity, and 2.5 million for gas. The parties are calling for the pool to be enlarged, which is also the initial intention of the government, in the face of bill increases in March that might go up to 55% for electricity and 41% for gas. But there is little to go around: without a budget adjustment, it could prove to be very little indeed.

On the bills, there is full agreement between the government and majority. But on the second front opened by the Lega and M5S, which the PD has also decidedly joined—namely, the request to eliminate the limits on credit transfers for the Superbonus—Draghi is not convinced. There will be changes, but, at least for now, not to the radical extent called for by the parties. There will be a decision next week.

Unless there are any postponements, the government is already set to deal with a thorny chapter on Friday: the concessions for bath establishments. Gentiloni, on behalf of Europe, insisted: “They should be reassigned via auctions.” Salvini got angry: “An inappropriate intrusion of the EU into the field.” But as a helpful measure, it’s not bad at all.

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