(Finance) – Inflation decreasing, thanks to the decline in energy prices, but which tends to remain high in the shopping cart. Wages recovering as a result of bargaining but still far from compensating for the inflation gap. It is the picture outlined by March economic note from the Fisac Cgil Studies & Research Office which fits into a macroeconomic framework defined as “high for longer”, i.e. high interest rates for a long time.
In general – observe the general secretary of Fisac CGIL, Susy Esposito – “the hypothesized risk of a strong recession has not, at the moment, emerged despite slowly decreasing inflation and a monetary policy that continues to be restrictive. But the world of work is struggling under the weight of an unfair tax system, which weighs on employees and pensioners and which encourages evasion while entire economic categories continue not to pay the taxes due. And this is also why we will strike on 11 April together with Uil, because ‘Enough is enough!’, it’s time for a fair tax reform “. “We are living in a time of great contradictions – he observes Esposito –. High interest rates increase the risk of a ‘hard landing’, which presupposes recession, job losses and impoverishment of families. Yet these consequences have not occurred: we are in a ‘soft landing’ dimension where, however, inequalities and poverty are increasing and where wealth is increasingly polarised”. Our country, explains Esposito, “is completely immersed in these contradictions, exacerbated by historical structural deficiencies. After a few exceptional years of growth, the result of post-pandemic policies, we have returned to values just above zero while some response is being given to the effects of the Pnrr (and its delays and unknowns). The Government’s policies, which celebrate apparent higher employment and income rates, while youth unemployment continues to be the second highest in Europe and precariousness rages, ignore the needs of the majority of workers and pensioners, favoring vice versa, through taxation, the wealthiest sections of the population. Enough is enough: April 11th – concludes the general secretary of Fisac CGIL – will be a general strike”.
Inflation and wages
The increase in wages, explains the economic note from Fisac Cgil, “although recovering thanks to bargaining, it is still far from fully compensating for the inflation gap: the marked deceleration of inflation during 2023 has reduced the distance between the price dynamics (Ipca) and contractual wages at around three percentage points, less than half of that observed in 2022”. It is important to note that this data, we read, “is strongly influenced by the contractual renewals of the public sectors, less so by those of the private sectors”. Furthermore, the note from the Fisac Cgil Studies & Research Office continues, “at the end of 2023, in the 44 contracts in force for the economic part only 47.6% of total employees (48% of the total salary) were covered while as many as 6.5 million workers (52.6%) are awaiting the renewal of their 29 national contracts. Another alarming fact, again detected by Istat, is that the average waiting time for renewal, for workers with expired contracts, increased from 20.5 months in January 2023 to 32.2 months in December 2023, in summary a further year has been lost.”
Bank rates, deposits and loans
Rates falling, reports Fisac Cgil. The 3-month Euribor, which recorded an average of 3.98% in November, with a peak of 4% in the middle of the month, stands at a level of 3.90%. The 10-year EurIRS rate, more sensitive to long-term dynamics, is set at 2.63%, down compared to November 2023 levels (equal to an average above 3%). The entire duration curve of these indicators is today well below the 3% threshold; the thirty-year indicator records, in March 2024, values around 2.3%. The decline in reference rates However, the note states, “it has not yet led to a reversal of the trend: credit to families and non-financial companies is still contracting by 2.7% in February 2024. According to data collected by Crif for 2023 the demand for mortgages from families decreased by 17.2% compared to 2022 while in September of the same year the new mortgages disbursed marked -24% (-5.2% subrogations)”. It is interesting to note “how 38.8% of the mortgages requested have a duration of between 25/30 years and the age of the applicants is between 45 and 75 for more than a third (35.4%) while the youngest represent less than 30%”.
Credit quality and bad debts
In the first month of 2024, bank bad debts net of devaluations are increasing, as noted by Abi. The increase, equal to 2.2 billion euros (+14.2% compared to December 2023) is certainly linked to the growing difficulties of the small business sector in meeting the cost of credit. “However, in absolute terms, we are still very far away – explains the note from Fisac Cgil – compared to the peak of 88.8 billion euros of net bad debts reached by the Italian banking system in the last quarter of 2015”.