Government, how much does a crisis cost today?

Every government crisis has an economic cost, generally proportional to how serious it is and how long it lasts. A government crisis today would have a significant cost also for another substantial reason: the economic situation is far from favorable and the international context is marked by the war in Ukraine, and its consequences starting from the increase in inflation and the shortage of raw materials. Not only that, a new substantial wave of Covid infections could also contribute to slowing down economic activity. Even on the financial markets front, political instability pays off. Just look at what the main indicators are saying already this morning. Piazza Affari, when the discussion in the Senate on the Dl Aid is underway, which could lead to a vote of confidence and, in fact, when the majority of the Cinquestelle are left, it yields 2%, doing much worse than the other European lists that range from the decline 1.2% of Madrid to 0.2% of Amsterdam. The Italian BTP which is the worst government bond in Europe, up in yields by 23 basis points at a rate of 3.35%. The spread with the 10-year German Bund which reached 212 The consequences of a government crisis at the moment, in essence, would have a higher cost due to the particularity of the phase that is going through, both looking at national economic policy , and the need to intervene quickly on wages and to protect purchasing power, in an attempt to defuse part of the consequences of the increase in prices, both looking at the international scenario, with the stop to gas supplies from Russia that could trigger, as argued Bank of Italy governor Ignazio Visco, a recession in the next two years. A clear but effective synthesis was made by Foreign Minister Luigi Di Maio. Without Draghi at Palazzo Chigi, “the Pnrr funds jump, it goes into provisional operation, it is not possible to take measures against expensive bills and expensive energy, it will not be possible to introduce the minimum wage, it will not be possible to make the cut of the tax wedge, the battle for the maximum gas price ceiling in the EU is over, Italy is weakening at international tables “. Those of Di Maio are words that are affected by the political climate and the position clearly contrary to the choices of the Cinquestelle and their leader Giuseppe Conte, also considering the split that has recently made. But it is undeniable that a government not in full swing, as any solution would be adopted to bring the country to early elections, would have limited room for maneuver and would also have to face the fibrillation on the markets and the difficulties in defending trust in a state. already heavily indebted. Not governing at full capacity carries a price that is paid anyway, even when a government remains standing without the substantial political support, and not just formal, of its majority. We need a government that is in a position to govern. For this reason, Prime Minister Mario Draghi has made it clear several times that his government can only go ahead if the conditions exist to do what is needed. The next few hours will tell whether the cost of a government crisis will be fully paid or whether a balance can be found that will allow the legislature to be completed with a government in full swing. (by Fabio Insenga)