In response to ‘market failures’ or for the purposes of social equity, the State regulates private economic activity; it directly produces or finances basic services such as education and health; it provides for the building of infrastructures and supports research and development; and it defines and manages the social welfare system.
By means of the public budget, the State performs a function of macroeconomic stabilization. Before the pandemic, public spending net of interest payments amounted to 45 per cent of GDP in Italy.