From the spread brake 17.1 billion savings in interest expenditure

Prudence pays off. And the general context of the start of rate cuts by the ECB lends a hand.

In the hours when the budget law reaches the crucial stage in Montecitorio, the Parliamentary Budget Office updates its calculations on public debt, offering good news for the prospects of Italian accounts. Because the markets' judgement on Italian economic policy summed up by the outlook improvements in the latest ratings round and the scissor action, albeit moderate, deployed by the European Central Bank have cut the spread by some twenty points compared to the levels of early October and kept government bond yields at bay. To the point that according to the forecasting models of the Parliamentary Authority on Accounts, BTp coupons are expected to remain 30 basis points below the forecasts of the Structural Budget Plan in all years between 20205 and 2029.

Translated into practice, these dynamics mean less interest expenditure, with a cumulative saving over the next five years that the UBB calculates at EUR 17.1 billion. From the interest brake should come an improvement of 0.1% of GDP per year to the public finance balances in 2025-27, then the positive gap should widen to two decimals in the following two years. An extra buffer, useful in case growth should turn out to be less buoyant than the ambitious +1.2% planned for next year.