Italy deficit narrows in 4th quarter 2023
MILAN: Italy’s budget deficit narrowed to 5.5 percent of gross domestic product in the fourth quarter last year, down from 6.7 percent in the same period of 2022, official data showed Friday.
MILAN: People walk past giant letters reading ‘milano’ with skyscrapers of the CityLife district in the background in Milan. The CityLife district is a residential, commercial and business district, with three skyscrapers: Il Curvo (The Curved One) (left), Il Dritto (The Straight One) – Allianz Tower (center) and Lo Storto (The Twisted One) – Generali Tower. - AFP.
Fuelling the improvement were higher tax receipts, which rose by 7.9 percent, according to the Istat national statistics agency. “In the fourth quarter of 2023, the public finance picture shows an improving debt burden and a tax burden that is growing compared to the fourth quarter of the previous year,” Istat said in a statement.
Household purchasing power registered its first annual growth, climbing by 2.1 percent after seven quarters of decline, despite contracting compared to the third quarter. Istat announced in March that for 2023, the budget deficit came in at 7.2 percent of GDP, down from 8.6 percent in 2022 - but much higher than the official target of 5.3 percent. The hard-right government of Giorgia Meloni has blamed the swollen deficit on the so-called Superbonus, an incentive scheme for energy-saving home improvements brought in under a previous administration.
The government intends to bring the deficit to below 4.5 percent of GDP this year, according to a source close to the matter. Economy Minister Giancarlo Giorgetti acknowledged Wednesday that Italy would again be subject to a European Union excessive deficit procedure (EDP) this year, for breaching the bloc’s fiscal rules. The EU’s Stability and Growth Pact limits the public deficit of member states to three percent of GDP and the debt to 60 percent. The rules were suspended due to the coronavirus pandemic, but came back into force this year. A reform approved in February confirmed the original limits, while allowing more flexibility in the event of excessive deficits.
Armani unit targeted
In another development, an Italian court has placed under partial judicial administration a unit of luxury fashion group Armani for using subcontractors who violated labor laws, according to a ruling made public Friday. Giorgio Armani Operations, a company wholly owned by Giorgio Armani which deals with the design and production of the label’s clothes and accessories, is not itself accused of wrongdoing.
But the court says one of its suppliers, Manifatture Lombarde, used subcontractors in the Milan area that employed undocumented migrants for the production of Armani bags, leather goods, and other accessories. In a ruling dated April 3 and made public on Friday, the court appointed a consultant for one year to work alongside managers to improve relations with suppliers. “The purpose of the judicial administration is not repressive but rather preventative,” to remove Giorgio Armani Operations “from criminal infiltration as quickly as possible”, the court said.
The contract between Armani and Manifatture Lombarde included an ethical code and an explicit ban on using subcontractors, but investigators found Manifatture Lombarde itself did not have its own workshops. Instead, the firm had subcontracted production to what the court called “Chinese workshops” mainly employing Chinese and Pakistani nationals working in conditions that violated basic safety rules in unsanitary places. The workers were forced to accept “particularly disadvantageous working conditions which translate into real exploitation”, notably by working a greater number of hours than officially declared, the court said.
In a statement, the Armani group said it was aware of the “prevention measure decided by the Courts of Milan against GA Operations”. “The company has always had control and prevention measures in place to minimise abuses in the supply chain. “GA Operations will collaborate with the utmost transparency with the competent bodies to clarify its position on the matter.” Giorgio Armani, 89, is the third richest man in Italy, according to Forbes magazine, with a fortune estimated at more than 11 billion euros. — AFP.
