Italy is no longer in recession, thanks to a new way of measuring growth and GDP across the European Union, as reported in ‘The Local’.
The changes mean that illegal activities such as prostitution and drugs are now included in the calculations.
And the inclusion of this illegal revenue in the data means that the Eurozone’s third biggest economy, which was in serious economic trouble, can now boast an end to the time line of negative growth: thanks to brothels and bootleggers.
The Italian National Institute of Statistics can now report a flat reading, an improvement on the 0.1 per cent decline seen in the first quarter of this year.
And despite the unorthodox recipe for growth, Italian leaders will breathe a sigh of relief as the statistics mean the country avoids being technically in a recession – by exactly that 0.1 per cent growth.
It gives Italy’s Prime Minister a short reprieve as the government struggles to boost the economy whilst keeping the budget deficit below the 3.0 pc of GDP and within the European Central Bank’s criteria for eurozone countries.
This new way of calculating GDP is known as SEC2010 and has come about due to different laws in EU countries regarding the legality of nefarious activities. The new EU accounting rules came into play last month and the aim is to ‘reflect developments in measuring modern economies’ according to a statement by Eurostat.
The black market revenue is also expected to reduce Italy’s national debt ratio to 132 pc of GDP – although this figure is still over double the EU’s ceiling of 60 pc.
However, the European Commission could be concerned about the last minute proposals by the Italian government to increase borrowing to finance tax cuts, reveals Business Insider.
The cuts, which politicians hope will stimulate economic growth through the more efficient use of disposable income by Italian consumers, is said to be “the biggest ever done in the history of the Italian Republic” according to Prime Minister Matteo Renzi.
Some EUR3.8 bn is expected to come from the fight against tax evasion, which the 39-year-old described as “a gigantic battle.”
Another EUR5 bn is to reduce an unpopular regional labour tax while 1.9 billion euros will go towards tax breaks for companies hiring new staff on full-time, long-term contracts.
“Dear employer, will you now hire someone on a long-term contract? Mamma mia! What more do you want? I’ve got rid of every alibi,” Renzi said.