January 22, 2021

Brussels asks Italy to rectify the "unprecedented" breaches of its budget

Brussels asks Italy to rectify the "unprecedented" breaches of its budget


The Commissioner for Economic and Monetary Affairs, Pierre Moscovici, delivered the letter in person to the Italian Minister of Economy, Giovanni Tria, in Rome. In it, the EU Executive expresses its confidence in maintaining a "constructive" dialogue with the Italian authorities and asks for a response no later than midday next Monday, October 22.

"Both, the fact that the budget draft includes a fiscal expansion close to 1% of GDP, while the Council recommends a fiscal adjustment, and the size of the deviation (a gap of approximately 1.5% of GDP) is unprecedented in the history of the Stability and Growth Pact, "reads the letter.

The European Commission criticizes in particular that the Italian public accounts project for 2019 an increase in primary spending of 2.7% that "exceeds" the recommended maximum of 0.1%, as well as that the deterioration of the structural deficit amounts to 0.8 % of GDP, which represents a "significant" deviation from the 0.6% improvement agreed with the EU.

The letter also denounces that a "preliminary" analysis of the budget draft suggests that Italy will not comply with the commitment to reduce public debt, currently at 130% of GDP, in a gradual manner until reaching a level of 60%.

The third element of criticism lies in the fact that the macroeconomic projections on which the economic plan is based have not been endorsed by the Italian independent tax authority, as required by European regulations.

"These three factors seem to point to a particularly serious breach of the budgetary obligations of the Stability and Growth Pact," laments the letter signed by Moscovici himself and the Vice President of the European Commission for the Euro, Valdis Dombrosvkis.

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