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POLITICS

France warns Italy against breaking EU commitments

The stability of the eurozone will be at stake if a populist new government in Italy fails to keep its financial commitments, French Economy Minister Bruno Le Maire warned on Sunday.

France warns Italy against breaking EU commitments
League leader Matteo Salvini and M5S leader Luigi Di Maio. Photos: Filippo MONTEFORTE, Alberto PIZZOLI / AFP
“If the new government takes the risk of not respecting its commitments on debt and the deficit, but also the clean-up of the banks, the financial stability of the eurozone will be threatened,” Le Maire told CNEWS television.
 
“Everyone must understand in Italy that Italy's future is in Europe and nowhere else, and if this future is to be in Europe, there are rules that must be respected,” he added.
 
Le Maire said previous commitments by Italy would remain “whichever government” was in place.
 
Brussels is anxious that Italy continues with efforts to bring down its massive debts in line with EU rules, wary that a new government in Rome will seek to increase public spending. The EU forecasts that Italian public debt will remain 130 percent above its GDP this year — more than double the bloc's 60-percent ceiling.
 
 
“I respect the sovereign decision of the Italian people, but there are commitments which go beyond all of us,” Le Maire said. “We will see what decisions are taken by Italian officials. I cannot stress enough how important it is to keep these commitments in the long-term to guarantee our common stability.”
 
The anti-establishment Five Star Movement (M5S) and far-right League party, which are edging towards forming a government, called for deep changes in Italy's relations with the EU in a joint policy programme published on Friday. Italy has been in political deadlock since inconclusive elections in March.
 
 
While an exit from the single currency — mooted in leaked drafts of the document — is no longer proposed, the document announced the parties' intention to review “with European partners the economic governance framework” of the EU, including the euro.
 
The parties want a monetary union that is “appropriate for the current geopolitical and economic imbalances and consistent with the objectives of the economic union”, it said.
 
In a Facebook video, Five Star leader Luigi Di Maio said that the programme had received an approval rating of more than 94 percent after it was put to party members for a vote on M5S' online platform. The League was also offering a vote to anyone visiting party stands put up across the country over the weekend.
 
But as voter approval is little more than a formality, all eyes are on who the two parties will choose as their candidate for prime minister. They need to announce a name in time for a meeting on Monday with President Sergio Mattarella.
 
Five Star became Italy's largest party in the March elections, gaining nearly 33 percent of the vote. The League — shorn of the rest of the rightwing coalition that won 37 percent — will be the junior coalition partner with 17 percent.
 
The joint policy platform also includes a number of manifesto promises from the League, including hardline immigration and security proposals.

POLITICS

Fuel tax cut and help with energy bills: Italy approves inflation aid package

Italy on Thursday night approved new measures worth around 17 billion euros ($17.4 billion) to help families and businesses manage the surging cost of fuel and essentials.

Fuel tax cut and help with energy bills: Italy approves inflation aid package

As expected, the final version of the ‘aiuti-bis‘ decree provides another extension to the existing 30-cents-per-litre cut to fuel duty, more help with energy bills, and a tax cut for workers earning under 35,000 euros a year.

The package also includes further funding for mental health treatment: there’s another 15 million euros for the recently-introduced ‘psychologist bonus’ on top of the 10 million previously allocated.

There are also measures to help agricultural firms deal with this year’s severe drought.

Italian Prime Minister Mario Draghi described the new package as an intervention “of incredible proportions”, which corresponds to “a little over 2 points of national GDP”.

However, he said, no changes were made to the national budget to pave the way for the new measures.

READ ALSO: Is Italy really giving all employees a ‘pay rise’ from August?

The measures will be funded with 14.3 billion euros in higher-than-expected tax revenues this year, and the deployment of funds that have not yet been spent, Economy and Finance Minister Daniele Franco said.

Italy has already budgeted some 35 billion euros since January to soften the impact of rising fuel costs.

The decree is one of the last major acts by outgoing Prime Minister Mario Draghi before an early general election next month.

Elections are set for September 25th but the former European Central Bank chief is staying on in a caretaker role until a new government is formed.

Draghi said the Italian economy was performing better than expected, citing the International Monetary Fund’s estimate of three percent for 2022.

“They say that in 2022, we will grow more than Germany, than France, than the average of the eurozone, more than the United States,” he told a press conference.

But he noted the many problems facing Italy, “from the high cost of living, to inflation, the rise in energy prices and other materials, to supply difficulties, widespread insecurity and, of course political insecurity”.

Inflation hit 8 percent in Italy in June – the most severe spike the country has experienced since 1976.

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