July 25, 2021

Brussels closes ranks and claims to Rome "revised budgets" before the Italian offer to seek "a compromise"

Brussels closes ranks and claims to Rome "revised budgets" before the Italian offer to seek "a compromise"



Italy has come to Brussels good. He wanted to erase the episode of shoe of his MEP before the economic commissioner, Pierre Moscovici. Or the veiled accusations of Matteo Salvini to Jean-Claude Juncker related to alcohol. Italy has launched a pulse to the European institutions, wanting to haggle the Stability and Growth pact with more public spending in order to encourage the economy to, thus, reduce debt.

But Brussels says no. And again. The last one, this Monday.

The Italian Government has reached the Eurogroup with a message of peace: "Commitment, let's look for a compromise". The word commitment was repeated again and again in the members of the Italian Executive, an approach to reach the ultimatum of November 13 with "a solution".

But the Eurogroup statement, advanced by The Financial Times reporter Mehreen Khan on Twitter, maintains that the ministers want Italy to "cooperate closely with the Commission" on its budget "in the preparation of a revised budget plan online with the Stability and Growth pact, the focus on debt reduction is an important part of the pact. "

In the imminent future, the deadline for the Commission to deliver new budgets: November 13.

Sources of the Italian Government have informed that in the meeting of the Eurogroup have offered a "commitment" with Brussels to find "a solution" to the problem respecting the Italian thesis: to encourage the growth through the expense to, thus, reduce the debt -which it is at 131% of GDP – and it is, in the words of the economic commissioner, Pierre Moscovici, "the enemy of the people".

Will there be new budgets? "It remains to be seen," the Italian sources affirm, although what the Eurogroup asks is "a revised budget".

"What we have come to offer is a commitment, to seek an agreement, in which our macroeconomic projections are respected." That commitment should arrive before the community ultimatum expires on November 13. According to the Italian media, that commitment would mean "an exemption from deficit rules next year, with the promise that the deficit and debt will be reduced after 2020. The problem is that the European institutions do not see it clearly .

In the last letter sent by Brussels to Italy On October 29, the European Commission referred to article 126, paragraph 3, of the Stability Pact, which opens the door to hypothetical sanctions for excessive debt. Sanctions that, fulfilling the requirements of Spain and Portugal, have never been applied in the past. But it is that in the past the Commission has never rejected a budget as it has done with Italy this time.

The letter affirmed that "the great budget expansion foreseen for 2019", together "with the risks of a reduction in nominal GDP growth, will be incompatible with the need to decisively reduce the debt to GDP ratio". In addition, he argues that the accounts presented by the M5S and the League are not in line with "the commitments assumed by Italy in its Stability Program" signed in April 2018 by the previous Democratic Party Government (PD, center-left).

Then, the PD said that Italy's deficit would be 0.8% in 2019 and in 2020, and would fall to 0.2% in 2021, while the current Italian administration estimates that the deficit will be 2.4% in 2019, of 2.1% in 2020 and 1.8% in 2021. +

The current Government also expects the country's debt to be 130% in 2019; 128.1% in 2020; and 126.7% in 2021.

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