Inflation is there. Full stop. The fact that it is temporary, as economists and central bankers reassure us, does not reassure us much because companies work today and cannot fail to take into account certainties such as those that Istat communicated to us at the end of November: + 3.8% on an annual basis in Italy the highest since 2008. In addition, everything is “temporary”, but for how long?
Is it good, bad? What awaits us? The level of uncertainty is high, but ” The future is wide open and depends on us, on all of us. “, as the famous aphorism of K. Popper says, but why?
We are experiencing a special situation: we are flooded with resources partly on loan and partly donated by the European Union, which has also suspended budgetary constraints; monetary policy is always expansionary, rates very low or negative; the consideration of Italy, thanks to President Draghi, never so high.
The answer to the question “will last a long time or it is a moment that will end soon”, depends on many factors, in particular: a. inflation, of course; b. COVID; c. debt.
A. If prices continue to rise, central banks will begin to intensify so-called “tapering”, i.e. to reduce the monthly pace of net asset purchases for government bonds, guaranteed securities and so on. If that were not enough, rates will rise, growth, currently high in Italy for example, will slow down. For the generation that has experienced “stagflation”, so a “cost-push” price growth without the increase in production is a serious problem; it is particularly so for our companies. That is why the so-called reforms for the growth of the PNRR are to be done immediately without waiting or hesitating on small issues of special interests. It’s up to us.
B. COVID variants continue to interfere with business choices. However, vaccines give us greater certainty and that climate of fear that has characterized 2020 must end soon. We must, even with all the changes caused by the pandemic, live what is generally called a “new normal” in the workplace, looking beyond. It’s up to us.
C. The issue of debt is technical but also cultural and is the most insidious. I heard the joke “debt is a problem of the last century”, I did not like it. It is clear that at this moment the Covid recession has been fought with expansionary policies both on a monetary and fiscal level. The discipline of debt, however, must remain, if not everything is “good” debt and not “bad”, to put it to Draghi, and in the end next generations will have to pay. Investments are made because with its own returns you think to repay the debt. That is the real rigour. That of the past was wrong, see the Greek crisis, because it demanded rigour without adequate resources for reforms. See all the activities in progress, such as the one related to the 110% bonus, without a healthy idea of return and stabilization of growth can be dangerous. It’s up to us.
The storm is no longer perfect, the route is difficult, the navigation in progress.
ing. Andrea Moltrasio
C.E.O – President