Opening the discussion at this National Roundtable was the observation that Italy’s stock of personal savings continues to highlight its strong position as a country with among the highest per-capita net worth in the world. Nevertheless, it was acknowledged that in order to give a complete picture of the situation, two areas in which Italy diverges from, in particular, other major European countries, need to be considered. On the one hand, in recent years Italy has been experiencing a decline in the propensity to save, which is increasingly shaping up to be a structural trend rather than a short-lived phenomenon; on the other, the breakdown of Italian household wealth differs from that of other countries due to the overwhelming preponderance of investment in real estate and, conversely, the lower rate of investment in managed funds and, above all, pension funds.
It was noted that the unusual composition of Italian household savings is accompanied by an endemic under-capitalization of Italian businesses. In particular, smaller firms especially struggle to find in the stock exchange an effective means for raising finance. It was felt that this spells a financial vulnerability for them which is certain to get worse with the progressive phasing-in of the Basel III rules and the subsequent overhaul, in a restrictive sense, of the lending policies of Italian and European banks. Moreover, the new situation in which international financial markets find themselves in the wake of the recent crisis, accompanied by the introduction of several far-reaching regulatory changes, have caused various institutional channels for raising capital for both banks and businesses to dry up, with the result of further intensifying the competition (even with the public finance sector) for funding.
It was stressed, however, that it is precisely at this stage that the production system needs to focus on growth and innovation, and that in order to support this development, significant financial resources are required – especially in the form of equity capital. Serving as a backdrop to this is the ongoing problem of the country’s relatively poor infrastructure. Even in this respect, Italian savings are having a hard time finding appropriate channels through which to fund works that, in addition to contributing to the general welfare of citizens, would provide an appropriate platform to revive the fortunes of businesses and local economies.
Savings were thus seen as providing the key and strength for the economy to resume the road to development and growth. It was felt that this goal was achievable on the condition that action is taken to address the factors that have so far rendered insufficient any efforts to channel Italian savings (and foreign investment) to the country’s businesses and infrastructure. In terms of savers themselves, the participants pointed to a need to invest in improving financial literacy, and particularly in the area of pensions, by promoting a greater awareness of the investment options available and a greater individual understanding of the extent of the entitlements to be expected upon retirement under the country’s contributions-based social security scheme. As far as the deployment of savings is concerned, and particularly in terms their being channeled to finance industry growth, it was acknowledged that any measures adopted would need to operate on various levels as the historical reluctance of Italian firms to open up their capital to professional investors or to embark on the process of listing on the stock market is also motivated by strong cultural factors. Nevertheless, the participants considered that the introduction of appropriate tax incentives, the removal or reduction of restrictions and costs associated with quoting on the stock exchange, efforts with a view to revitalizing and rationalizing managed funds, and specific measures aimed at encouraging the formation of inter-firm networks and fostering youth entrepreneurship would be steps in the right direction.