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Italy’s public debt to hit record high in 2019: EU

The European Commission cut its eurozone growth forecast for 2019 on Tuesday, with overspending by populist-run Italy a major concern.

Italy's public debt to hit record high in 2019: EU
Pierre Moscovici, European Commissioner for Economic and Financial Affairs (L) and Italy's Finance Minister Giovanni Tria in Brussels. Photo: EMMANUEL DUNAND/AFP

The EU has warned that Italy's public debt will balloon to a record 133.7 percent of GDP in 2019, a situation that could reopen a bitter feud between Brussels and Rome about the populist government's spending.

Italian debt would grow even further in 2020 to 135.2 percent of GDP, it said; well over commitments made to Brussels, and more than double the EU's 60 percent limit.

READ ALSO: Italy's 'growth decree' to fight recession

The commission said the economy across the EU as a whole — still including Britain – would grow by 1.4 percent instead of its earlier forecast of 1.5.

In its quarterly forecast, the EU executive blamed the downward trend on the slowdown in China and US protectionism that has crimped global confidence.

“The European economy is showing resilience… yet risks to the outlook remain pronounced,” said EU vice president Valdis Dombrovskis, warning of “further escalation of trade conflicts and weakness in emerging markets, in particular China.”

Valdis Dombrovskis, European Commission vice-president in charge of the Euro, Social Dialogue, Financial Stability, Financial Services and Capital Markets Union. Photo: AFP/John Thys

Europe should also “stay alert to a possible no-deal Brexit,” he added, with negotiations on the EU's divorce with the UK stalled and no agreement in sight.

The alarm over Italy's debt comes just as the eurozone's third-biggest economy returned to slender growth earlier this year after a short recession.

Last year's downturn had put pressure on the populist government, which took power in June on the back of big-spending electoral promises.

Belgium, Spain, France and Italy are expcted to commit significant public overspending in 2019, with debt levels close to or above 100 percent of GDP, the EU said.

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POLITICS

Italian rivals pitch abroad in trilingual vote videos

Days after Italy's far-right leader made a multilingual appeal to foreign commentators to take her seriously, her main rival in September elections issued his own tit-for-tat video Saturday condemning her record.

Italian rivals pitch abroad in trilingual vote videos

Former prime minister Enrico Letta, leader of the centre-left Democratic Party, declared his pro-European credentials in a video in English, French and Spanish, while deriding the euroscepticism of Italy’s right-wing parties.

It echoes the trilingual video published this week by Giorgia Meloni, tipped to take power in the eurozone’s third largest economy next month, in which she sought to distance her Brothers of Italy party from its post-fascist roots.

“We will keep fighting to convince Italians to vote for us and not for them, to vote for an Italy that will be in the heart of Europe,” Letta said in English.

His party and Meloni’s are neck-and-neck in opinion polls ahead of September 25 elections, both with around 23 percent of support.

But Italy’s political system favours coalitions, and while Meloni is part of an alliance with ex-premier Silvio Berlusconi and anti-immigration leader Matteo Salvini, Letta has struggled to unite a fractured centre-left.

Speaking in French perfected in six years as a dean at Sciences Po university in Paris, Letta emphasised European solidarity, from which Italy is currently benefiting to the tune of almost 200 billion euros ($205 billion) in
post-pandemic recovery funds.

“We need a strong Europe, we need a Europe of health, a Europe of solidarity. And we can only do that if there is no nationalism inside European countries,” he said.

He condemned the veto that he said right-wing Hungarian Prime Minister Viktor “Orban — friends and allies of the Italian right — is using every time he can (to) harm Europe”.

In Spanish, Letta highlighted Meloni’s ties with Spain’s far-right party Vox, at whose rally she spoke earlier this summer, railing at the top of her voice against “LGBT lobbies”, Islamist violence, EU bureaucracy and mass
immigration.

In English, he condemned the economic legacy of Berlusconi, a three-time premier who left office in 2011 as Italy was on the brink of economic meltdown, but still leads his Forza Italia party.

Letta’s programme includes a focus on green issues — he intends to tour Italy in an electric-powered bus — and young people, but he has made beating Meloni a key plank of his campaign.

Meloni insisted in her video that fascism was in the past, a claim greeted with scepticism given her party still uses the logo of a flame used by the Italian Social Movement set up by supporters of fascist leader Benito Mussolini.

In a joint manifesto published this week, Meloni, Berlusconi and Salvini committed themselves to the EU but called for changes to its budgetary rules — and raised the prospect of renegotiating the pandemic recovery plan.

Elections were triggered by the collapse of Prime Minister Mario Draghi’s government last month, and are occurring against a backdrop of soaring inflation, a potential winter energy crisis and global uncertainty sparked by
the Ukraine war.

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