SHARE
COPY LINK

POLITICS

Italy escapes EU sanctions over massive public debt

The European Commission said on Wednesday it has for now decided against taking disciplinary action against Italy over its high public deficit after the government in Rome pledged to rein it in.

Italy escapes EU sanctions over massive public debt
Italy's finance minister Giovanni Tria (L) with European Affairs Commissioner Pierre Moscovici in October 2018. Photo: Alberto Pizzoli/AFP

“The Commission concluded that an excessive deficit procedure against Italy by virtue of the debt is not justified at this stage,” Economics Commissioner Pierre Moscovici said.

The decision by the commission, the EU's executive arm, comes after Italian Prime Minister Giuseppe Conte said his country's public deficit is “perfectly on track” to reach 2.04 percent of gross domestic product in 2019.

READ ALSO: Italy insists it's 'on track' to avoid EU budget fines


Italiam Prime Minister Giuseppe Conte. Photo: Bertrand Guay/AFP

At the start of June, Brussels formally put Italy on notice about its deteriorating deficit and snowballing debt and opened an excessive deficit procedure which could result in an unprecedented fine of more than €3 billion for the country.

The European Commission in October rejected the big-spending budget submitted for approval by the Italian coalition government of the hard-right League and the anti-establishment Five Star Movement.

Rome and Brussels then agreed on the 2.04-percent figure in December, but the Italian government was forced to raise the forecast to 2.4 percent in March given the deteriorated economic outlook.

READ ALSO: 

The cabinet calculated at a budget meeting late Monday that some €6.24 billion of additional revenues would now be coming in this year, while expenditure would rise only by an extra €130 million. Furthermore, a huge chunk of money earmarked for early retirement payments and a citizens' income for the less well-off has been frozen due to lower than expected demand.

So the overall deficit for this year would be around €7.6 billion lower than anticipated, the cabinet said in a statement late on Monday. 

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.

COST OF LIVING

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.

READ ALSO: What is Italy doing to cut the rising cost of living?

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.

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.

SHOW COMMENTS