In the two-year period 1990-91, the recession phase of the international economy also affected our country; income growth – sustained above all by the considerable development of domestic demand, in particular of household consumption – was below 2%. Despite the competitive pressure resulting from the substantial stability of the lira exchange rate for industrial firms, which from January 1990 to September 1992 was inscribed in the narrow fluctuation band of the EMS, inflation remained above 6%; around 3 percentage points above the average level of the countries adhering to the European exchange agreements. The loss of competitiveness and the modest growth in world demand was matched by a very disappointing trend in net exports; This resulted in a reduction of more than 2% in industrial production in 1991 and a deterioration in the trade balance which was added to the serious one in capital income (consequent, in addition to the high net debt position, to the unfavorable composition of interest on foreign assets and liabilities); the current account balance-of-payments deficit exceeded 1.8% of GDP in 1991.

In addition to the non-occurrence of a definitive return of the dynamics of nominal incomes and of inflation to the prevailing values ​​at the community level, the gravity of the two central issues that have long awaited a solution to be resolved clearly emerged: territorial rebalancing and that of public finance. Despite the strong commitment of public resources, in the form of subsidies, transfers and concessions to work and capital, the relative position of the South has worsened since the early 1980s in terms of both output per resident and, above all, employment. On the other hand, the necessary structural measures to contain public expenditure have not been implemented, especially in the apparently out of control component of social security expenditure. The public deficit has thus exceeded, since 1981, 10% of GDP; the lack of monetary coverage of the deficits, essential for the recovery from inflation, has therefore determined, in the presence of an excess of expenditure on revenues, a continuous and growing recourse by the state to the issuance of public debt securities, worrying both for the size (equal to over 100% of GDP in 1991, compared to less than 60% in 1980), and due to the short maturities (with an average residual life of the outstanding securities of less than three years).

In 1992, as the recession of the international economy continued, the negative factors already present in the previous two years worsened in Italy GDP growth fell to 0.9%, fixed investments fell by 1.35%, employment by 0.9%; despite the considerable slowdown in domestic demand, still favored by the negative trend in property income, the current account deficit in the balance of payments reached around 2.1% of GDP. The Italian economy was particularly affected by the severe currency crisis which led to the suspension of interventions in defense of the lira parity in the EMS in mid-September, which was hit by acute tensions in the summer following the negative outcome in June of the Danish referendum on the treaty. of Maastricht for the European Union and in the outcome of the French one expected for the second half of September is very uncertain. Political uncertainty and the markets’ distrust of the capacity of Italy to cope with the structural problems of public finance have ended up making the defense of the lira exchange vain, despite the subsequent increases in the official discount rate, the high levels to which short and very short-term interest rates have been brought and the massive support measures implemented by the monetary authorities.

The pressure on the lira was particularly strong in July; after a pause in August – also connected with the positive agreement at the end of July on labor costs, which had led to the definitive abolition of the escalator and the blocking of wage bargaining for the whole of 1993 – it resumed with vigor in the last week of month, coinciding with the worsening of tensions between EMS currencies, aggravated in September by the approaching referendum in France. The realignment of the lira decided on 13 September, with a devaluation of 7% against the other currencies of the EMS, and the simultaneous German decision to reduce official interest rates did not prove sufficient to restore order in the currency markets. Then followed, after a few days,

The free float of the lira quickly led to a significant depreciation of the lira against all the main currencies, even beyond what was necessary to recover the losses in price competitiveness accumulated by manufacturing companies; despite the more decisive action to consolidate public accounts and a notable slowdown in inflation, which fell below 5% as a result of the agreement on labor costs, it was significantly affected by the strong uncertainties that have affected the political environment. institutional of the country. Alongside the opportunity that the depreciation of the lira could lead to a significant increase in net exports and thus a recovery in production and employment.