Italian spending power to take 20 years to recover from crisis

Italy's largest confederation of enterprises Confcommercio said on Wednesday that the country's spending power will take more than 20 years to return to the growth levels seen prior to the start of the global economic crisis. According to a study of the confederation, because of the crisis "every Italian family has experienced, on average, a reduction of their power purchase of over 3,400 euros (4,533 U.S. dollars)." The size reached by the drop in income was such big that "even if it was possible to return to pre-crisis growth rates, we should anyway wait until 2036 to recover the lost purchasing power," the study said. In real terms, the income of Italian families was declining continuously since the start of the economic crisis in 2008 with an overall loss of 86 billion euros, it noted. In his address to the confederation's annual assembly, Confcommercio president Carlo Maria Sangalli called on the new Italian government to avoid a value-added tax increase planned from July to ward off further deepening of recession. "The impact of this increase on consumption, growth and employment would really add fuel to the fire of recession," he said. Italy, whose youth unemployment rates has soared to 41.9 percent with a total of 2.2 million young citizens who neither study nor work, is in its longest recession in 20 years. This year, record-high fiscal pressure is expected to reach 44.6 percent of gross domestic product or 2.4 percent more than the European Union average. However, Sangalli noted, "there was nothing inevitable" in the country's decline. "We were not the victims of a cynical and cheating destiny. Instead, we pay for wrong choices and missed opportunities. Today, however, we cannot afford neither," he said. The Italian government is trying to tackle deepening crisis starting by setting out procedures to reform the constitution in order to make the state system more efficient and cut bureaucracy costs. The reform, for which the government has set an 18-month deadline, is expected to include a new voting law, cutting the number of parliament members, presently 945, and stripping the upper house, or senate, of its equal powers compared to the lower chamber.