“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.
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.
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.
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.