How can Europe help Italy? Defensive aid and aggressive aid

Italy’s structural problems are well known: The absence of productivity gains erodes companies’ competitiveness and leads to low profitability and weak investment; The poor quality of the education system and of skills among the population contribute to the weak productivity; The very high public debt ratio reduces fiscal room and leads to the constant risk of a debt crisis; The continued contraction in lending to companies, due to the poor state of the country’s banks and despite the relatively low level of corporate debt, contributes to the weak investment. How can Europe help Italy? Some forms of this aid are simply defensive: interest rates on the public debt are kept low by the ECB; some of the new public debt will be mutualised; But Italy also needs some more “aggressive” aid from Europe: joint financing of corporate investment, European investment programmes for education, healthcare, pharmaceuticals, the energy transition, etc. Italy needs more than help to finance itself; it also needs help to achieve productivity gains .