Italy needs to spend more, faster

Paolo GentiloniEU GDP EU EU , the commissioner overseeing its €750bn ($820bn) post-pandemic recovery fund, said last month that if it failed because of his fellow Italians, “that would really be a disaster”.Indeed. Italy is by far the biggest beneficiary of a vast facility that, for the first time, is financed with debt jointly underwritten by the member states. It stands to receive €191.5bn in grants and soft loans. If it does not spend the money fully and productively, economists will need to trim, if not eliminate, the annual 1-1.5 percentage points they have tentatively added to forecasts of Italian growth over the next ten years. And it would impair the commission’s aim of using the fund to close the gaps between Europe’s—and Italy’s—richer norths and poorer souths. It would also have serious implications for financial integration. “If Italy fails to spend this money, its dream of persuading its European partners to jointly underwrite future debt will be just a chimera,” says Eleonora Poli, head of economic analysis for the Centre for European Policy, a think-tank.