Thursday

29th Sep 2016

Italy presents anti-austerity roadmap

  • "The European project is suffering an unparalleled crisis," Renzi's government says (Photo: ec.europa.eu)

Engaged in a policy struggle with the European Commission, Italian prime minister Matteo Renzi is calling for more flexible fiscal rules, growth policies, a eurozone budget and cost sharing of the migrant crisis.



The demands, which Rome says are "a far-reaching policy agenda and concrete proposals", are included in a nine-page document published on Monday (22 February) by the Italian ministry of economy and finances ahead of a visit to Rome by commission president Jean-Claude Juncker.

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"Fiscal rules should prove their adequacy to cope with a challenging economic environment," says the document, entitled A Shared European Policy Strategy for Growth, Jobs, and Stability.

"A framework designed for normal conditions of growth and inflation has proved incapable to tackle effectively the impact of very low nominal growth on potential growth and on debt dynamics," it notes.

"These shortcomings have implications for the measurement of fiscal indicators on which policy recommendations are based and should be addressed. Price developments should be more effectively embedded in fiscal rules," the document adds.

Renzi's governement, which has been asking for EU flexibility in the assessement of member states' budgets, says the commission’s communication on flexibility in the Stability and Growth Pact "marked a step forward in improving the policy mix".

"It creates the appropriate incentives for reforms and investment. It strengthens the coordination between structural and fiscal policies triggering a virtuous circle: structural action and investments boost medium-term growth thus supporting consolidation of public finance," it says in the document.

On the migration crisis, Italy, which is a front line country, says that sharing responsibility for the management of EU external borders "would represent a powerful response".

It also calls for a "mutualised funding mechanism" of EU border management, "which could entail issuance of common bonds". Already floated during the eurozone crisis, the idea of launching eurobonds has always been ruled out by Germany.

Again aiming at Germany and the policies pursued so far by the commission, the document states that "risk sharing and mutualisation offer a powerful incentive to abide by the rules and prevent opportunistic behaviour".

Renzi's government also calls for a eurozone budget managed by a eurozone finance minister.

Juncker will meet Renzi and other Italian officials on Friday (26 February) to try to mend relations.

In his new year address, the commission president lashed out at Renzi, accusing him of "vilifying and criticising the commission on every street corner”.

In December, Renzi said that "Europe has to serve all 28 countries, not just one”, aiming at the commission president whom he considers too close to German chancellor Angela Merkel.

"The European project is suffering an unparalleled crisis," the Italian government memo says.

"The policy reaction to the economic recession and large unemployment is often perceived as insufficient by European citizens, which often struggle to perceive the added value of being part of the Union," it says.

New EU rules on financial products in limbo

A feud between MEPs and the EU commission is threatening to derail financial services regulation that would protect consumers from misleading investment products.

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