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Italy offers to lower deficit, but EU says it’s not enough

A new 2019 budget plan from the Italian government to reduce its deficit is still not enough to secure EU approval, Economic Affairs Commissioner Pierre Moscovici said on Thursday.

Italy offers to lower deficit, but EU says it's not enough
Italian PM Giuseppe Conte (L) shakes hands with EU Commission President Jean-Claude Juncker. Photo: Emmanuel Dunand/AFP

“It's a step in the right direction, but nonetheless I have to say we're still not quite there. There are still more steps to take,” the EU's Moscovici told French senators in Paris, after Rome's latest proposal to avoid financial penalties from Brussels.

He was speaking the day after Prime Minister Giuseppe Conte made an offer to the European Commission to lower Italy's deficit to 2.04 percent of GDP in 2019. 

The European Commission in October rejected the big-spending budget submitted for approval by the Italian coalition government of the League and the Five Star Movement. The budget includes a universal basic income of €780 for the least well-off to help them get back into the job market.

READ ALSO: Here are the main things included in Italy's 'people's budget'


Italian Prime Minister Giuseppe Conte (C) with his deputies Luigi Di Maio (L) and Matteo Salvini (R). Photo: Filippo Monteforte/AFP

After meeting with European Commission President Jean-Claude Juncker on Wednesday, Conte said that additional resources had given Italy more financial wriggle room. “Technical work allowed us to obtain a margin of negotiation because we have recovered some financial resources,” said Conte.

He said that the budget could be revised down from a proposed deficit of 2.4 percent to 2.04 percent, due to the “recovered” financial resources.

The move comes after EU officials warned Italy that a previous proposed reduction in the public deficit to 2.2 percent would still be insufficient to avoid EU sanctions.

“The European Commission will now evaluate the proposals received this afternoon. Work will continue in the coming days,” a commission spokesperson said.

READ ALSO: Italy's budget battle with Brussels: What you need to know


Photo: Gerard Cerles/AFP

If agreement is not reached, Italy could find itself the target of an EU excessive deficit procedure, which could ultimately lead to fines of up to 0.2 percent of the nation's GDP.

The offer of a budget deficit of 2.04 percent remains considerably higher than the 0.8 percent the previous centre-right government had planned.

“My government wants to keep the confidence of Italians, but it is also reasonable,” said Conte. “We have put on the table a serious and reasonable proposal and we are confident that it can be concluded, in the interests of all and in particular Italians, with a positive solution.”

In its negotiations with the EU, Italy has highlighted recent developments in France where President Emmanuel Macron's concessions to “yellow vest” protestors threaten to blow-out deficit targets.

READ ALSO: Italian government says its budget will prevent 'scenes like we've seen in Paris'

European Commissioner for Economic Affairs Pierre Moscovici on Wednesday told AFP that France and Italy would not be held to different standards on their budget deficits.

“There is no question of privileged treatment for some and exaggerated toughness for others,” Moscovici said on the sidelines of a financial conference in Frankfurt.

“The rules are the same for everybody,” he added, while noting differences in the situations between France and Italy. Italy's existing debt burden was much heavier than France's, at 130 compared with 100 percent of GDP, he said.

Brussels has said a high deficit would only add to Italy's already massive debt burden and not deliver the growth promised after years of austerity measures. 

READ ALSO: 

COVID-19 RULES

Italy eases Covid measures ahead of new government

Italy's outgoing government is easing measures against coronavirus from Saturday despite an increase in cases, weeks before handing over to a far-right administration that has criticised the tough restrictions.

Italy eases Covid measures ahead of new government

Prime Minister Mario Draghi’s government said it would not renew regulations requiring FFP2 face masks to be worn on public transport – these expired on Friday.

However, it has extended for another month the requirement to wear face masks in hospitals and other healthcare settings, as well as residential facilities for the elderly.

READ ALSO:  Why are so many Italians still wearing face masks in shops?

By the time that rule expires on October 31, a new government led by far-right leader Giorgia Meloni is expected to be in place — with a very different attitude to Covid-19 restrictions than Draghi’s.

Italy was the first European country to face the full force of the coronavirus pandemic in early 2020, and has had some of the toughest restrictions.

Last winter, it required certain categories of workers to be vaccinated and demanded proof of a negative test, recent recovery from the virus or vaccination — the so-called Green pass — to enter public places.

READ ALSO: What is Italy’s Covid vaccination plan this autumn?

The pass was strongly criticised by Meloni’s Brothers of Italy party, which swept to a historic victory in elections on Sunday.

“We are against this certificate, full stop,” the party’s head of health policy, Marcello Gemmato, La Repubblica newspaper on Friday.

He said it gave “false security” because even after vaccination, people could get and spread coronavirus.

Gemmato said vaccines should be targeted at older people and those with health problems, but not be obligatory, adding that the requirement for healthcare workers to be vaccinated would not be renewed when it expires at
the end of the year.

READ ALSO: Italy gives green light to new dual-strain Covid vaccines

Cases of coronavirus are rising slightly again in Italy, likely due to the return of schools and universities.

More than 177,000 people with coronavirus have died in Italy since the start of the pandemic.

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