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Italy must pursue 'responsible' budget policy: EU official

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Italy must pursue 'responsible' budget policy: EU official
Outside the European Central Bank in Frankfurt. Photo: Daniel Roland/AFP
09:30 CEST+02:00
Italy must strive to pursue a "responsible" budget policy, the European Commission vice-president in charge of the euro said in an interview published Tuesday, as the country's nascent populist far-right coalition picked a little-known lawyer as prime minister.

"We view it as important that the Italian government remains on course in pursuing a responsible budget policy," Valdis Dombrovskis told German business daily Handelsblatt, noting that Italy has the second highest level of state debt after Greece.

Italy's €2.3 trillion of debt is 132 percent of its gross domestic product (GDP), the highest ratio anywhere in Europe apart from Greece. The EU forecasts that Italian public debt will remain at 130 percent above its GDP this year – more than double the bloc's 60-percent ceiling.

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Brussels is therefore anxious that Italy continues with efforts to bring down its massive debts in line with EU rules, wary that the new government in Rome will seek to increase public spending. 

The Five Star Movement and nationalist League's 58-page "Contract for the Government of Change" rejects post-financial crisis austerity policies and features hardline immigration and security proposals.

The document's costly financial measures and eurosceptic tone has worried financial markets as has the nomination of Giuseppe Conte as prime minister.

Dombrovskis noted that the coalition's plan to drastically slash taxes and reverse pension cuts will be costly.

"We can only advise it to stay on course in terms of economic and fiscal policies, to stimulate growth through structural reforms and to keep the budget deficit under control," said Dombrovskis. 

READ ALSO: How EU founder member Italy went eurosceptic


Photo: Vasily Maximov/AFP

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