The OECD Economic Survey of Italy, presented today in Milan by OECD Secretary-General Angel Gurría and Italian Minister of Economy and Finance Giulio Tremonti, says the strength of the recovery is uncertain.

“Italy’s economy is recovering, and we expect that growth will be somewhat stronger next year,” Mr. Gurría said. “But we should not underestimate the task ahead. Italy must take additional steps to make growth more robust and boost its resilience to future shocks.”

On fiscal policy , the OECD says Italy now has a satisfactory framework for planning overall spending and revenues over a three-year period. The low level of private debt limits the potential impact of financial instability on the Italian economy.

The objective of bringing the overall deficit below 3% of GDP, as required under the European Union’s single currency rules, is feasible, but will require sticking to the planned expenditure restraint, the OECD said. Further action on taxation, starting with base-broadening measures, might be necessary if there is any slippage.

On structural policy, the OECD says Italy should complete ongoing liberalisation of the services sector and consider extending the process to other areas, notably transport and local services.

A special chapter on Italy’s higher education system says that the recently passed Law on Universities rightly focuses on improving the governance of public universities, notably by boosting the quality of governing boards, separating administrative management from teaching and research and strengthening evaluation mechanisms. With this in place, other measures to increase efficiency, such as improved recruitment procedures and better career structures, will be more effective.

The OECD encourages Italy to consider progressive increases to tuition fees, taking due consideration of specific socio-economic conditions of students. This should be complemented by the creation of a new system for means-tested student loans to mitigate its impact on the needy. “In the longer run, a mass university education system requires a greater financial contribution from students who can afford it, and this means higher course fees,” Mr Gurría said. “While new fees cannot and should not be introduced in a hurry, and without proper consultation, our recommendation is that this be put on the agenda.”

A second special chapter encourages Italy to focus on developing economically efficient ways to achieve environmental objectives, mainly by “getting the prices right.” More and better use of green taxes and charges, for example in the water and waste management sectors, could help achieve these goals. Privatisation of some local services – coupled with creation of strong national regulators - should also be considered.